Saturday, 31 January 2015
Last updated 1 day ago
Apr 25 2008 | 11:18am ET
The Securities and Exchange Commission has sued the son of noted investor Mario Gabelli for allegedly allowing a British hedge fund to market-time a Gabelli Funds mutual fund in exchange for an investment in a Gabelli hedge fund.
The suit, filed in New York against Marc Gabelli and Gabelli Funds Chief Operating Officer Bruce Alpert, alleges that Gabelli and Alpert authorized “an undisclosed market-timing arrangement” with hedge fund Headstart Advisers, then known as Folkes Asset Management. At the same time, Alpert told the board of the Gabelli Global Growth Fund that the firm was taking action to prevent market-timing, which is not illegal. The SEC says Gabelli Funds was also simultaneously rejecting other would-be market-timers.
Gabelli Funds itself has settled with the SEC, agreeing to pay $16 million. The regulator is seeking civil damages and an order preventing Gabelli and Alpert from violating securities laws. Mario Gabelli was not named in the lawsuit.
According to the SEC, the arrangement with Gabelli and Alpert allowed Folkes to triple its market-timing capacity; the hedge fund made $4.2 billion worth of trades in the mutual fund from 1999 to 2002. In exchange, the SEC alleges that Folkes invested in a Gabelli-managed hedge fund.
Earlier this month, the SEC sued Headstart for its alleged market-timing and late-trading activities.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…