Hedge Fund Vision Faces SEC Probe

Sep 23 2010 | 1:40pm ET

The Securities and Exchange Commission is investigating New York-based hedge fund Vision Capital Advisors, according to published reports.

The regulator may be looking in to valuation issues at the $700 million firm, headed by Adam Benowitz and Randolph Cohen. Vision, which suspended redemptions last year due to the illiquidity of some of its portfolio, is heavily invested in private investments in public equity deals. Many of those deals included warrants, whose valuations have often been called into question.

“I would not be surprised if the SEC is looking at their very aggressive valuations,” Erin Arvedlund, the journalist and former analyst and marketer at Vision, told Reuters. Arvedlund said she left the firm in 2007 because she was concerned about its valuation of warrants.

As part of its probe, the SEC has sent subpoenas to firms that have done business with Vision. Those requests sought e-mails, documents and communications throughout the nearly six-year history of Vision, which was founded in early 2005. The SEC has also sought information from the hedge fund itself.

A spokesman for Vision said the firm was “cooperating with the SEC’s request for information.”

Earlier this year, Cohen, a former Harvard University finance professor who now teaches at the Massachusetts Institute of Technology, told Reuters that Vision does have a lot of unrealized gains and that, while he rejected criticism of its valuation methods, criticism of the unrealized gains “is a fair comment.”

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