The SEC charged Charles J. Marquardt with insider trading in the shares of the Evergreen Ultra Short Opportunities Fund (Ultra Fund), a mutual fund that invested primarily in mortgage-backed securities.
At the time of his trading, Marquardt was the Senior Vice President and Chief Administrative Officer for operations of Evergreen Investment Management Company, LLC (Evergreen), the investment adviser to the Ultra Fund.
The SEC alleged that, on June 11, 2008, Marquardt learned that the Ultra Fund might soon reduce the value it assigned to several of its mortgage-backed securities holdings, a move that would likely decrease the Fund's per-share net asset value (NAV) and might cause the Fund to close. The SEC further alleged that, on the next day, June 12, 2008, Marquardt redeemed all of his Ultra Fund shares and caused a family member to do the same. Over the next several days, the Fund did, in fact, decrease the value it assigned to its holdings, triggering significant reductions of the Fund's NAV. On June 19, 2008, Evergreen publicly announced that the Ultra Fund would be liquidated. The SEC found that, by redeeming their Ultra Fund shares prior to the closing of the Fund on June 19, Marquardt and his family member avoided losses of approximately $4,803 and $14,304, respectively.
The SEC's action against Marquardt follows its enforcement action against Evergreen and an affiliated distributor, filed in June 2009, in which the SEC charged Evergreen with violating the federal securities laws in connection with, among other things, overvaluing holdings in the Ultra Fund from February 2007 to June 2008. Evergreen agreed to pay more than $40 million to settle those charges.
Click http://www.sec.gov/litigation/litreleases/2010/lr21383.htm to access the release.