Sunday, 1 February 2015
Last updated 1 day ago
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.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…