WEST PALM BEACH, FL (HEDGECO.NET) – The U.S. Securities and Exchange commission [SEC] has filed charges against four officers of Beacon Hill Asset Management LLC, a hedge fund firm relating withabout $300 million losses in investor assets. SEC officials also said it is still investigating old fraud allegations against the asset manager. The four men charged were John Barry, the President ofBeacon Hill Asset Management Company, Thomas Daniels, Chief Investment Officer, Mark Miszkiewicz, Chief Financial Officer, and John Irwin, a Senior Portfolio Manager.
Some of the defense attorneys for the accused officials said they would contest such charges. An attorney for the company, Kevin Marino said, �Beacon Hill and its principals intend to vigorously contest these charges.� The SEC accused the Beacon Hill management and its principals of fraud involved in the firm�s loss of about US $300 million in investor�s assets. Beacon Hill�s problems stem from its asset allocation methods through its three feeder funds, Bristol Fund, Safe Harbor Fund and Milestone.
Beacon Hill asset management traded over the counter collateralized mortgage obligations, and through its marketing efforts portrayed itself as an arbitrageur, and said the company is exploiting the price inefficiencies in the market. The SEC suit charges that while Beacon Hills� assets invested on interest rates rising, they were encountering significant losses. The firm continued to hide such realities by inflating the prices of its securities in its master feeder funds, according to the SEC.
Subsequently, as the troubles of the company continued to grow, three of Beacon Hill�s principals liquidated an account, that according to the SEC papers, the three principals were the only investors in. Furthermore, such liquidation was not disclosed to the SEC.
Beacon Hill also underestimated its losses to the SEC as well as investors in the fund, telling them that its funds had lost 25% of its assets and subsequently revised the losses to 54% in a few months. The SEC law suit is seeking disgorgement of some assets which the agency charged were ill-gotten, and in addition the SEC wants an imposition of unspecified civil penalties against the firm and its principals according to news reports.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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