Wednesday, 23 July 2014
Last updated 14 hours ago
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.
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…