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

Steinbrugge: Will Hedge Funds Help or Hurt During the Next Market Correction?

Sep 7 2016 | 11:55pm ET

Most investors have become accustomed to quick rebounds when markets correct, but...

Lifestyle

Quattrex Sports AG Debuts Soccer-Focused UCITS Fund

Sep 9 2016 | 9:54pm ET

Innovative alternative investment company Quattrex Sports has unveiled a new UCITS...

Guest Contributor

Malik: The Ever-Changing Middle Market and The Entering Class of 2016

Sep 2 2016 | 5:01pm ET

Deal sourcing and origination is only going to get more competitive given current...