Saturday, 26 July 2014
Last updated 1 day ago
Feb 15 2012 | 2:46pm ET
Four years after closing its doors in the face of a Securities and Exchange Commission lawsuit, hedge fund Pentagon Capital Management has been ordered to pay the piper.
A federal judge in New York yesterday ordered the London-based firm and CEO Lewis Chester to pay $76.8 million. Pentagon and Chester had fought the charges that it late-traded mutual funds at a trial last year, but U.S. District Judge Robert Sweet found in favor of the SEC.
"The defendants intentionally, and egregiously, violated the federal securities laws through a scheme of late trading," Sweet wrote. "This scheme was broad-ranging over the course of several years and in no sense isolated."
The judgment against Pentagon and Sweet calls for $38.4 million each in disgorgement and civil penalties.
Pentagon in March 2008 said it would liquidate in expectation of the SEC's allegation. A week later, the SEC filed its lawsuit, accusing the once-US$2.2 billion hedge fund of defrauding mutual funds from June 1999 through September 2003.
"We are extremely disappointed by the judgment and intend to appeal," Frank Razzano, a lawyer for Pentagon and Chester, told Bloomberg News.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…