Actor's Mom Ensnared In Bogus Trading Scheme

Feb 1 2007 | 12:50pm 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

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…