Ritchie Capital Settles Late-Trading Case

Feb 5 2008 | 12:30pm ET

Hedge fund Ritchie Capital Management and three employees have agreed to pay $40 million to settle a mutual fund late-trading case, the Securities and Exchange Commission said today.

Ritchie Capital allegedly operated an illegal late-trading scheme for almost three years, the SEC found, ending in September 2003.

“Ritchie Capital concealed its late-trading by receiving pre-4 p.m. time-stamps on its order tickets,” Merri Jo Gillette of the SEC’s Chicago office said. “The respondents’ attempt to cover their tracks by using falsified order tickets merely underscores the egregiousness of the fraudulent scheme.”

According to the SEC, Ritchie Capital made thousands of late trades on behalf of its Multi-Strategy Global Trading fund, netting it some $30 million in profit. The regulator charged that Ritchie Capital founder A.R. Thane Ritchie approved the scheme and oversaw its performance, and Warren DeMaio helped develop and supervise the strategy. Another employee, Michael Mauriello, actually placed the late trades with brokers.

All parties settled without admitting or denying the charges.

The fund and Ritchie Capital have agreed to pay a $30 million disgorgement and about $7.4 million in prejudgment interest. Ritchie Capital and Ritchie will pay $2.5 million, and DeMaio $250,000, in civil penalties.


In Depth

Q&A: Jeff Eaton Talks Capital Raising, CalPERS And The Secondaries Market

Oct 14 2014 | 10:16am ET

Global placement agent Eaton Partners has raised close to $60 billion for some of...

Lifestyle

MacDonald-Korth Offers Insights Into Paintings Bought, Sold By Hedgies

Oct 7 2014 | 9:00am ET

Definitive and complete ratings require an in-person examination of an artwork,...

Guest Contributor

PAAMCO: European Equity Exposure - Challenging Year, But All is Not Lost

Oct 16 2014 | 4:12am ET

European equity hedge fund managers have had a tough time so far this year. The...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

October 2014 Cover

Deeply flawed risk benchmark

Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...

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.