MIT Prof., Son Fined For Alleged Fraud

Apr 23 2012 | 2:23pm ET

A Massachusetts Institute of Technology professor and his son have agreed to pay $4.8 million and to securities industry bans to settle allegations that they lied to investors in their hedge fund about, well, just about everything.

Gabriel Bitran and his son, Marco, raised more than $500 million for GMB Capital Management. The two told investors that the fund would employ the elder Bitran's quantitative trading systems—producers of impressive returns—and that the professor would spend 80% of his time on the fund.

The only problem is, none of its was true, the Securities and Exchange Commission said. Gabriel Bitran, who is still a member of the faculty at MIT's Sloan School of Business, didn't play any role in managing the hedge fund. And the returns they trumpeted? Made up, the SEC said.

Indeed, the Bitrans didn't invest the money themselves, per se: They put the money with other hedge fund managers, including hedge funds which invested in the Bernard Madoff and Thomas Petters Ponzi schemes.

"The Bitrans lied to investors about what they had done, and they lied to investors about what they would do," the SEC's David Bergers, head of its Boston office, said. "Then, when the SEC began an exam, they lied to the exam staff, as well."

The Bitrans did not admit or deny wrongdoing. But they agreed to pay $4.3 million in disgorgement and $250,00 each in fines. Both also agreed to be barred from the securities industry.


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.