OSC: Spork Guilty Of 'Non-Criminal Fraud'

May 20 2011 | 1:33pm ET

A Canadian regulator has ruled that hedge fund manager Otto Spork committed fraud by inflating his funds' returns and overcharging investors.

The Ontario Securities Commission rapped Spork, of Sextant Capital Management, for "non-criminal fraud." According to the OSC, Sextant inflated the value of the Strategic Opportunities fund and two offshore hedge funds by investing in a pair of private companies with rights to develop Icelandic glaciers. The regulator says that 95% of the hedge fund’s assets are invested in the companies, which are themselves almost totally owned by founder Otto Spork and the Sextant funds.

The fees charged were "unreasonable" and the "payments made to Otto Spork constitute acts of fraud," the OSC ruled. The regulator also said that Spork "misappropriated money."

It is unclear whether Spork, who vowed a "vigorous" defense, will appeal the ruling. The OSC is yet to schedule a sanctions hearing.


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Future of Private Equity: New Opportunities, New Challenges

Feb 3 2017 | 6:41pm ET

The private equity industry’s astonishing rebound since the financial crisis has...

 

From the current issue of