Beacon Rock Cops A Plea

Mar 30 2007 | 11:39am ET

The first hedge fund to face criminal charges for allegedly deceptive mutual fund market-timing is close to settling the case. Under a proposed plea agreement filed in U.S. District Court in Philadelphia Monday, Beacon Rock Capital will plead guilty to one count of securities fraud in return for paying a forfeiture of $475,000, with possible additional penalties. 

“We take full responsibilities for our actions,” said Blake Singer, principal of the Portland, Ore.-based firm, which wound down it its hedge fund business in 2003. “We have fully cooperated with the government, including the New York Attorney General, the Securities and Exchange Commission and the U.S. Attorney’s Office in Philadelphia, and will continue to do so.”

Industry sources close to the case told FINalternatives that they are baffled as to why this particular prosecutor, “has gone after such a small fish relative to the other players.”

While Beacon Rock is the first hedge fund to be charged criminally, myriad other hedge funds have settled civil charges related to the mutual fund late trading and market timing scandal that rocked the industry in 2003, including Millennium Partners and Canary Capital Partners.

A spokesman for the U.S. Attorney’s Office in Philadelphia said that his office could not speak for other jurisdictions and why they have not filed criminal charges against other hedge funds, but noted, “We evaluate each case on its own merits, and in this particular case we believed the evidence was strong.”

The spokesman added that in addition to the $475,000 disgorgement, the potential fine could be up to $25 million, though settlement guidelines suggest a fine of $1.2 million to $2.5 million. The hearing to approve the settlement is tentatively set for April 4.


In Depth

Star Fund Managers Battered By Rocky Ride In Yields, Currencies

May 28 2015 | 6:05am ET

Some of the biggest names in the investment world have been whipsawed by the recent...

Lifestyle

Yale Receives $150 Million Gift from Blackstone’s Schwarzman

May 12 2015 | 12:10am ET

Yale University announced it has received a $150 million gift from Blackstone Group...

Guest Contributor

When Less is More: The Case for Concentrated Equity Strategies

Jun 1 2015 | 7:59am ET

The conventional wisdom is that wide diversification is the “holy grail,” as...

 

Sponsored Content

Editor's Note