Actor's Mom Ensnared In Bogus Trading Scheme

Feb 1 2007 | 1:50pm ET

On Jan. 29, the U.S. District Court for the Northern District of Illinois ordered Sharon Vaughn--the mother of Hollywood actor Vince Vaughn--and her hedge fund, Directors Financial Group, to pay disgorgements and prejudgment interest totaling $808,000 as well as to distribute all of the fund's assets, totaling $22.5 million, to its investors, according to the Securities and Exchange Commission.

The SEC filed a complaint last March alleging that Vaughn defrauded her clients in the by investing in a fraudulent prime-bank trading scheme, contrary to the fund's disclosed trading strategy. Vaughn failed to put on the brakes and perform proper due diligence on the trading scheme or its promoters, and entered into a profit-sharing agreement that ceded 25% of the fund's profits to one of the scheme’s promoters.

Vaughn allegedly gave complete control of the fund's assets to the promoters, which is in violation of the terms of the fund's prospectus, and tried to cover up her fraud by withholding documents from—and providing fake documents to—the SEC’s exam staff.

In addition to the above-mentioned orders and relief previously ordered, the court has ordered Vaughn to pay a $200,000 civil penalty. She consented to the orders without admitting or denying the allegations. The U.S. Attorney's Office for the Northern District of Illinois has also indicted the two promoters associated with the trading scheme.


In Depth

Q&A: Old Hill's Stone On Private Debt, P2P And Credit Bubbles

Jun 6 2017 | 7:52pm ET

While institutional capital continues to flow into the broader private debt sector...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Steinbrugge: Asia-Focused Hedge Funds Offer Great Opportunities

Jun 23 2017 | 3:33pm ET

Emerging market strategies have outperformed their developed-market peers for five...

 
Error

From the current issue of