Spork Appeals C$1 Million Fine

Jul 13 2012 | 11:54am ET

Hedge fund manager Otto Spork has appealed the Ontario Securities Commission's order that he pay nearly C$8 million for allegedly inflating his Sextant Capital Management funds' returns and overcharging investors.

Spork filed his notice of appeal in Ontario Divisional Court, calling the C$1 million fine "harsh and excessive." The appeal claims that the OSC "misapprehended" evidence of what it called "non-criminal fraud" in concluding that Sextant required a "formal independent valuation in order to determine the net asset value of the fund(s)."

The OSC last year found Spork guilty of "non-criminal fraud." The regulator said that he inflated the value of the Sextant Strategic Opportunities fund and two offshore hedge funds by investing in a pair of private companies with rights to develop Icelandic glaciers. The OSC added that 95% of the hedge fund’s assets are invested in the companies, which are themselves almost totally owned by Spork and the Sextant funds.

In addition to the fine, the OSC last month ordered Spork to pay C$6.75 million in disgorgement. It also assessed fines of C$500,000 against former Sextant executive Dino Ekonomidis and C$190,000 against Spork's daughter Natalie, a Sextant director.

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