Tuesday, 31 May 2016
Last updated 1 hour ago
Mar 23 2007 | 12:59pm ET
This week, Portland, Ore.-based Beacon Rock Capital became the first hedge fund in the U.S. hit with criminal charges for deceptive mutual fund market-timing. And in what may have been a preemptive strike, FINalternatives has learned that, over the past few months, the principals at Beacon Rock have been quietly re-branding the firm, dropping the “Rock” and going with the solid (and hopefully different-enough) sounding Beacon Investment Group.
Executives at the new Beacon include former Beacon Rock principals Blake Singer, Bryant Jaksic and Bill Woodruff, among others. In addition, both firms have the same mailing address, and the Beacon Investment Group web site is essentially a replica of the late Beacon Rock site.
Calls to executives at the firm were referred to their lawyer.
As early as January, principals at Beacon Rock began telling their business associates that they were re-naming the firm Beacon Investment Group. But a call to the allegedly new Beacon, inquiring about their relation to Beacon Rock, was answered by an apparently confused receptionist who said that the latter no longer existed.
In another twist, a source who used to work closely with the fund apparently mistook this week’s charges, filed Tuesday by the U.S. attorney in Philadelphia, with what may have been an earlier set of charges.
“They’ve already settled,” said the source, who spoke on condition of anonymity. “They’ve already paid a fine and everything.”
A search of public databases and Securities and Exchange Commission filings didn’t turn up any formal charges, but a reference to Beacon Rock appears in New York Supreme Court documents dated Aug. 4, 2004. The documents were filed by then-Attorney General Eliot Spitzer in regard to a case against Conseco, which eventually settled the charges for $20 million.
“Another timing hedge fund, Beacon Rock, used six different entities, none bearing the Beacon Rock name, to purchase nine Monument contracts totaling approximately $30 million,” according to the filing. “The two fund managers each served as annuitant for two of the contracts, its head trader for two after that, and its office manager for the last three. The office manager, who was 30 years old when her first contract with Conseco was signed, chose to receive annuity payments starting in the year 2078, when she would have been 106.”
Calls and e-mails to Beacon Rock’s attorney were not answered by press time. If convicted of the charges, Beacon Rock faces a fine of as much as $25 million. No individuals at Beacon Rock have been charged with a crime.