November 11, 2011

SEC Charges San Diego-Based Investment Adviser and Its President with Fraud

The SEC issued an Order Instituting Administrative and Cease-and-Desist Proceedings alleging that Western Pacific Capital Management, LLC (Western Pacific) and Kevin James O’Rourke (O’Rourke) urged many Western Pacific clients to invest in a security without disclosing that Western Pacific would receive a 10% commission. The SEC further alleges that Western Pacific and O’Rourke failed to register as a broker, failed to provide required written disclosures to clients, improperly redeemed one hedge fund investor’s interest ahead of another’s, and made material misstatements and omissions to clients regarding the fund’s liquidity.

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November 10, 2011

SEC Charges New York-Based Hedge Fund Managers With Securities Fraud

The SEC charged ThinkStrategy Capital Management, LLC (ThinkStrategy) and managing director Chetan Kapur with deceptive conduct in connection with two hedge funds that they managed and advised: ThinkStrategy Capital Fund (Capital Fund) and TS Multi-Strategy Fund (Multi-Strategy Fund).

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November 9, 2011

SEC Charges Two Minnesota-Based Fund Managers With Facilitating Petters Ponzi Scheme

The SEC charged two Minnesota-based hedge fund managers and their firm with fraudulently funneling more than half a billion dollars of investor money into a Ponzi scheme operated by Minnesota businessman Thomas Petters. This is the fourth case that the Commission has brought against hedge fund managers for facilitating the Petters fraud.

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November 9, 2011

SEC Enforcement Division Produces Record Results in Safeguarding Investors and Markets- Agency’s Fiscal Year Totals Show Most Enforcement Actions Filed in Single Year

The SEC announced that the agency filed a record 735 enforcement actions in the fiscal year that ended September 30.  This record number includes many cases involving highly complex products, transactions, and market practices, including those related to the financial crisis as well as insider trading by market professionals.

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November 9, 2011

SEC Obtains Record $92.8 Million Penalty Against Raj Rajaratnam

The SEC obtained a record financial penalty of $92.8 million against billionaire hedge fund manager Raj Rajaratnam for widespread insider trading, the largest penalty ever assessed against an individual in an SEC insider trading case.

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October 31, 2011

Hedge Fund Adviser Charged with Operating an Illicit Bank Conversion Scheme

The SEC filed a civil injunctive action against Drake Asset Management, LLC, of Glen Head, New York, and Oliver R. Grace, Jr., of Hobe Sound, Florida, for conducting a scheme to evade the group purchase limits of the public offerings of seven banks that were converting from mutual to stock ownership.

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October 31, 2011

Quant Hedge Fund Adviser Alleged to Have Committed Fraud

The SEC charged Andrey C. Hicks of Boston, Massachusetts, and Locust Offshore Management, LLC, his investment advisory firm, with committing fraud in connection with misleading prospective investors about their supposed quantitative hedge fund.

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October 27, 2011

SEC Orders FINRA to Improve Internal Compliance Policies and Procedures

The SEC ordered the Financial Industry Regulatory Authority (FINRA) to hire an independent consultant and undertake other remedial measures to improve its policies, procedures, and training for producing documents during SEC inspections.  According to the SEC’s order instituting settled administrative proceedings, certain documents requested by the SEC’s Chicago Regional Office during an inspection were altered just hours before FINRA’s Kansas City District Office provided them.

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October 26, 2011

SEC Charges Traders in Fraudulent “Free-Riding” Scheme

The SEC charged a pair of purported money managers with orchestrating an illegal “free-riding” scheme of selling stocks before they paid for them and netting $600,000 in illicit profits.

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October 21, 2011

SEC Charges Denver-Area Hedge Fund Manager With Insider Trading

The SEC brought additional charges in its insider trading case against Denver-based traders who allegedly traded on confidential information in the securities of Mariner Energy Inc. ahead of the oil and gas company’s $3.9 billion takeover by Apache Corporation in April 2010.

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