OSC Says Spork’s Brother-In-Law Participated In Fraud

Add Sextant Capital Management founder Otto Spork’s brother-in-law to the list of people accused by Canadian officials of defrauding the hedge fund’s investors.

The Ontario Securities Commission yesterday said Konstantinos Ekonomidis was responsible for marketing the Sextant Strategic Opportunities Fund. He joins Spork, Spork’s daughter Natalie and Robert Levack, Sextant’s former chief compliance officer among those charged with illegal self-dealing and inflating the hedge fund’s returns.

Ekonomidis had “significant and direct involvement in investor relationships for all of the Sextant funds,” the OSC said in a revised statement of allegations. He and the other three charged “all breached their management duties to that fund to the detriment of investors.”

According to the OSC, Sextant inflated the value the Strategic Opportunities fund and two offshore hedge funds by investing in a pair of private companies with rights to develop Icelandic glaciers. The regulator says that 95% of the hedge fund’s assets are invested in the companies, which are themselves almost totally owned by founder Otto Spork and the Sextant funds.

A hearing on the OSC’s allegations is set for May 3. Spork has promised a “vigorous” defense.