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

Q&A: Filippo Pignatti Morano On The Ultimate Alternative Investment...Classic Cars

Jan 29 2015 | 12:37pm ET

In 2011, Filippo Pignatti Morano launched a fund to invest in classic cars. FINalternatives...

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

Five Tips For Successfully Marketing Your Hedge Fund

Jan 30 2015 | 9:14am ET

When it comes to the hedge fund industry, the notion of “build it and it will...

 

Editor's Note