New York (HedgeCo.Net) – Former hedge fund manager Nikolai Battoo has been ordered to pay more than $358 million in a SEC lawsuit stemming from million in losses Battoo hid from investors.

“This is an appropriate penalty because of the sheer enormity of the fraud, both in dollar figure and number of investors,” Judge Edmond E. Chang wrote in a Sept. 30 order. “There must be a substantial penalty both to punish the Battoo defendants and to deter others from committing fraud on this scale.”

The funds were lost during the Madoff scandal in 2009. Meanwhile, Battoo misappropriated about $49 million of client funds to pay for his “flamboyant lifestyle,” the SEC said.

Battoo boasted remarkable investment success throughout the global financial crisis while allegedly exaggerating the value of the assets he manages and concealing major losses from investors. The SEC alleges that Nikolai Battoo claimed to manage $1.5 billion on behalf of investors around the world, including at least $100 million for U.S.-based investors.

But contrary to Battoo’s proclaimed track record of exceptional risk-adjusted returns for his investors, he actually suffered major losses in 2008 due to his investments in the Bernard Madoff Ponzi scheme and a failed derivative investment program. Rather than admit the losses to investors, Battoo has been overstating the value of his investments in a variety of ways.

Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
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