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

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

Concerned About Your HFT Exposure? Hedge It!

Mar 26 2015 | 1:06pm ET

High-frequency trading has been a persistent storyline for several years. The trading...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note