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Thursday, 19 January 2017
Last updated 8 hours ago
Feb 12 2014 | 10:23am ET
Hedge fund manager Marlon Quan has been found civilly liable for securities fraud in the Thomas Petters Ponzi scheme case.
Quan and his firms, Acorn Capital Group and Stewardship Investment Advisors, violated securities fraud laws, a federal jury in Minneapolis found yesterday. He was cleared on one count of securities fraud and another of aiding and abetting Petters' $3.5 billion fraud.
The Securities and Exchange Commission, which brought the lawsuit against Quan, alleged that he had raised more than $578 million for Petters and had helped Petters cover up his fraud by engaging in "round-trip" transactions. Petters would wire money to Acorn and Stewardship, which would return it immediately.
The SEC said it would seek a fine and restrictions on Quan's activities in the securities industry.
Quan's lawyer, Christopher Casamassima, argued that the split verdict—the jury also found liability in three of the four cases brought against Acorn and Stewardship—is actually a victory for his client.
"Because these findings cannot be reconciled, they reflect a split, not-unanimous jury," Casamassima told Bloomberg News. "Since unanimity is required for liability, the effect of the two inconsistent findings is that the SEC has failed to sustain its claim of securities fraud against Mr. Quan."
The SEC rejected that reading.
"The jury found the defendant liable for fraud, and the one charge on which it found against the SEC was narrower and does not impact the verdict," David Glockner, head of the SEC's Chicago office, said. "We are pleased with the result."