Friday, 29 May 2015
Last updated 3 hours ago
Apr 4 2008 | 2:00am ET
Last week, Pentagon Capital Management announced it would close shop in expectation of a regulatory complaint. Yesterday, that complaint came.
The U.S. Securities and Exchange Commission filed suit against the London-based hedge fund, which manages £1.1 billion (US$2.2 billion), and its CEO for allegedly improper mutual fund trading practices.
According to the SEC, Pentagon defrauded U.S. mutual funds through a late-trading and market-timing scheme it ran from about June 1999 to September 2003. The regulator said the firm’s Special Purpose Fund earned some $62 million in ill-gotten gains, with Pentagon and CEO Lewis Chester reaping the incentive fees.
“PCM actively traded U.S. mutual funds through Pentagon Fund’s accounts at numerous broker-dealers in the United States,” the complaint, filed in federal court in New York, said.
Lawyers for Pentagon say they will demonstrate their clients’ innocence in court.
May 27 2015 | 2:15pm ET
Support Hedge Funds Care, also known as Help For Children (HFC), by participating in this year's raffle. All proceeds go to support HFC's mission of preventing and treating child abuse. Read more…