Fund of hedge funds Pacific Alternative Asset Management will not face a Securities and Exchange Commission enforcement action over its relationship with Paloma Partners's Donald Sussman.
Both the SEC and PAAMCo confirmed the end of the probe, which followed an October court ruling granting Sussman a 40% stake in PAAMCo. The fund of funds said the investigation's end was "good news."
"We are grateful for all the expressions of support we received from our clients over these months, and we look forward to continuing to serve you," PAAMCo CEO Jane Buchan.
The investigation led several institutional investors to put PAAMCo on watch.
The SEC launched its probe after U.S. District Judge Richard Sullivan said, in his ruling, that the firm's arrangement with Sussman, who seeded PAAMCo with $2 million, "may have been designed to mislead a number of observers, from the tax authorities to the SEC to entities wishing to invest in women-owned businesses." Sullivan said Sussman may have been given a convertible loan in exchange for his seed funding, rather than an equity stake, to ensure PAAMCo would "qualify as a woman-owned business."