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

Hedge Fund Veteran Peter Borish Talks Trading

Dec 17 2014 | 9:32am ET

Peter Borish says 2014 was “tricky” from a trading perspective. “The best...

Lifestyle

Cohen Donates $1.5M To GOP Governors Association

Dec 10 2014 | 7:13am ET

The Republican Governors Association raised close to $25 million from October 1...

Guest Contributor

Q&A With Daniel Gallancy: Institutional Interest In Bitcoin Is Growing Steadily

Dec 12 2014 | 7:54am ET

Daniel Gallancy is founder and CEO of SolidX, a provider of total return swaps for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.