Petters Settlement Stopped In Wake Of Hedge Fund Fraud Accusations

Mar 28 2011 | 1:25am ET

A Securities and Exchange Commission lawsuit against a hedge fund has thrown a monkey wrench into a $14 million settlement stemming from the Thomas Petters Ponzi scheme.

A federal judge in Minneapolis put a stop to the settlement on Friday, the day it was supposed to be paid, after the SEC filed suit against Connecticut hedge fund manager Marlon Quan and his Acorn Capital Group. According to the regulator, Quan invested most of the $459 million he raised from investors with Petters and later sought to conceal Petters' $3.5 billion fraud.

The SEC, which timed the suit in part to block the $14 million payment, said it objects to the terms of the settlement.

"The money belongs to all of Mr. Quan's victims, not just some of them," the SEC's John Birkenheier said. "Investors in the U.S. will receive nothing."

Of the $14 million, half would go to the liquidator of the Acorn hedge funds, $5.9 million would go to Quan lender DZ Bank, and nearly $1 million would pay Quan's legal bills and other expenses.

In spite of the latter provision, a lawyer for Quan emphasized that the accused fraudster would receive no money personally.

"Mr. Quan has been fully cooperative with the SEC," Brian Michael said. "Nothing has been hidden."

U.S. District Judge Ann Montgomery gave the two sides until April 14 to figure out the mess.


In Depth

Hedge Funds Take Interest In ‘Soft Deposits’

Nov 19 2014 | 11:56am ET

New York-based Winchester Equities, headed by Avi Benamu and Jack Hazan, funds soft...

Lifestyle

Cohen Buys $101 Million Sculpture

Nov 12 2014 | 9:17am ET

Steven Cohen was the sole bidder for a rare Alberto Giacometti sculpture at Sotheby...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

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

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

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.