SEC Accuses Fund Manager Konior Of Fraud

Jun 4 2012 | 1:25pm ET

The Securities and Exchange Commission has charged New York-based fund manager Jason J. Konior and his two firms—Absolute Fund Advisors and Absolute Fund Management—with running what amounts to a Ponzi scheme.

Konior raised $11 million selling investors limited partnership interests in Absolute Fund, an investment vehicle that Konior claimed had $220 million in trading capital. The SEC says Konior told investors the fund would “allocate millions of dollars in matching investment funds, place the combined funds in brokerage accounts through which investors could trade securities, and operate a ‘first loss’ trading program that would allow investors to dramatically increase their potential profits.”

Instead, alleges the market watchdog, Konior and firms siphoned off about $2 million to pay redemptions from earlier investors and cover their personal and business expenses.

The SEC obtained an asset freeze against Konior and his companies last week in federal court in Manhattan.

“Konior falsely portrayed Absolute Fund as a legitimate investment vehicle designed to maximize investors’ access to trading capital in order to grow their hedge fund businesses,” said Bruce Karpati, co-chief of the SEC enforcement division’s asset management unit. “In reality, Konior’s operation became a way for Konior to funnel cash to his firms and himself for unauthorized purposes.”

The SEC’s complaint charges Konior, AFA, and AFM with violating the antifraud provisions of the Securities Exchange Act of 1934 and seeks, among other things, permanent injunctive relief, disgorgement of ill-gotten gains and financial penalties.

Konior and his firms have neither admitted nor denied the allegations but have consented to the entry of an order freezing their assets, imposing a preliminary injunction against further violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and providing other relief.

 


In Depth

Hedge Funds Take Interest In ‘Soft Deposits’

Nov 19 2014 | 11:56am ET

New York-based Winchester Equities, headed by Avi Benamu and Jack Hazan, funds soft...

Lifestyle

Cohen Buys $101 Million Sculpture

Nov 12 2014 | 9:17am ET

Steven Cohen was the sole bidder for a rare Alberto Giacometti sculpture at Sotheby...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

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

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

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.