Trader Who Impersonated Boss on Calls with SEC Sentenced to Four Months In Jail

Aug 7 2015 | 2:15pm ET

Former hedge fund portfolio manager Steven Hart was sentenced to four months in prison yesterday for lying to regulators and obstruction of an SEC probe.

Hart was sentenced by U.S. District Judge Katherine Polk Failla in New York. He pled guilty to obstruction of justice and perjury charges in March and had faced a sentence of five years in prison for each count. 

Hart was indicted for obstructing a 2009 SEC investigation that was looking into suspicious trades related to his fund, Octagon Capital, and an unnamed New Jersey-based firm that served as an adviser for several affiliated investment funds and where he was a portfolio manager and employee. 

During the investigation, Hart intercepted multiple subpoenas sent to the unidentified firm's president, yet gave sworn testimony in a deposition that the president was aware of the investigation and had approved his trades. Both statements were untrue.

At one point, Hart pretended to be a fictitious employee when SEC lawyers called looking for his supervisor and never relaying the message. Subsequently, he impersonated the supervisor on multiple calls with the SEC, declaring in one that Hart was considered a “valued employee” of the firm, according to legal filings. 

The SEC’s investigation was concluded in 2012 and found that Hart had committed violations of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act, among others. He was ordered to pay more than $1.2 million in disgorgement, penalties and interest. 


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