Zwirn Cleared In Accounting, Valuation Probe

Feb 24 2011 | 10:40am ET

The founder of D.B. Zwirn & Co. has been cleared of involvement in a valuation scandal at the defunct hedge fund.

The Securities and Exchange Commission's New York office yesterday recommended that no enforcement action be filed against Daniel Zwirn, Opalesque reports. The agency has completed its investigation of the firm, launched three years ago after the hedge fund announced it was closing its doors in the wake of the accounting scandal.

Zwirn told investors in 2007 it had uncovered improper accounting during its 2006 financial audit, including improper financial transfers and accounting of expenses, like those involving Zwirn's use of a private jet. The firm, which said it had resolved the issues and reimbursed investors, also alerted the SEC to the accounting issues as well as the failure of a former manager to "follow a systematic pricing methodology" for illiquid assets.

The revelations led investors to flee D.B. Zwirn, which in turn led to the hedge fund pulling the plug.

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