Lauer Acquitted Of All Charges In Hedge Fund Fraud Case

Apr 28 2011 | 10:34am ET

Accused fraudsters take heart: Michael Lauer, alleged by the SEC to have run “one of the largest hedge fund frauds in the history of the United States,” is a free man.

The Lancer Group founder, who faced 25 years in jail, was acquitted of all criminal charges by a jury in the Miami federal court where he was tried.

Lauer had been accused of defrauding investors to the tune of $200 million, beginning in 1999. According to court filings, the SEC accused the hedge fund manager and an associate of buying quantities of restricted stock of shell companies while having brokers buy a smaller number  of shares in the same companies at higher, open-market prices to drive share prices up.

Lauer is then alleged to have inflated his funds’ returns (and generated larger fees) by valuing all the firm’s securities at the higher closing prices.

Lauer’s lawyers, on the other hand, said the hedge fund manager was simply a smart trader—and the jury agreed. One juror told AP that the only thing Lauer was guilty of was “surrounding himself with a bunch of jerks.”

The trial took six weeks, but jurors took just over three days to reach their verdict.

Lauer, who was fined $62 million by the SEC in a related civil case, says he plans to return to the hedge fund business.


In Depth

FINtech Focus: Fundbase Aims To Revolutionize Access To Hedge Funds

Jan 23 2015 | 11:03am ET

Global investment in financial technology—also known as fintech—is booming....

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

From Switzerland With Love: Some Hard Truths About Central Banks And Risk

Jan 23 2015 | 7:54am ET

In the wake of the Swiss National Bank uncoupling the country’s currency from...

 

Editor's Note