Philadelphia Inquirer – Defunct hedge fund Canary Capital Partners L.L.C. has agreed pay the state $10 million to settle allegations that it stacked the deck against ordinary investors, the NewJersey Attorney General’s Office said yesterday.
Secaucus-based Canary, two of its units, and managing principal Edward J. Stern were accused of trading after hours, when mutual-fund prices are frozen, to reap profits from after-hours events that affect a stock’s price the next day.
In addition, Canary and Stern were accused of market timing, or making trades into and out of funds to take advantage of short-term market fluctuations at the expense of long-term shareholders.
“The whole idea of our marketplace is that they’re supposed to be fair and open and that everyone gets a fair shot,” said Franklin Widmann, chief of the state Bureau of Securities. “They weren’t playing that way. They set up a situation where they concealed and disguised the nature of their trading.”
