SEC Says San Francisco Hedge Fund Manager A Fraud

Sep 27 2007 | 7:52am ET

We can’t speak about their hearts, but approximately 100 investors allegedly left their money in San Francisco, and in the wrong hands.

The Securities and Exchange Commission has charged a San Francisco hedge fund manager with lying to investors and misusing their investments, it said yesterday.

Alexander Trabulse allegedly used his Fahey Fund as his own personal kitty, spending investor money on cars, a home theatre system and an overseas shopping allowance for his ex-wife, all the while boasting to investors about astronomical—and, apparently, fictional—returns of upwards of 200%.

“Trabulse betrayed the trust investors placed in him by fabricating performance figures and treating the hedge fund as if it were his own personal bank account,” SEC enforcement chief Linda Chatman Thomsen said.

The SEC said Trabulse raised about $10 million for his “hedge fund”, founded in 1997. According to account statements, the fund was doing extraordinarily well, though the SEC alleges “the statements he provided to investors bore no relation to the fund’s actual performance.”

“Trabulse encouraged his existing investors to serve as references for new investors,” Helane Morrison of the SEC’s San Francisco office said. “As a result, his false account statements not only lulled existing investors into believing their investments were hugely profitable, but lured new investors into the fund.”

The SEC complaint, filed yesterday in San Francisco federal district court, seeks disgorgement of ill-gotten gains, penalties and other relief.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

The Cult of Loss Aversion: A Call to Rethink Risk in Global Macro Investing

Sep 4 2014 | 5:45am ET

In the wake of a traumatic loss, whether it is financial or personal, it is just...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

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.