Beacon Rock, Former Broker Sentenced In Market-Timing Case

May 14 2008 | 9:10am ET

The first criminal mutual-fund market-timing case had made a former hedge fund broker the first to be sent up the river in the scandal that rocked the hedge fund and mutual fund worlds.

Thomas Gerbasio, a former Philadelphia-based registered representative, was sentenced to one year and one day in prison for his role in helping hedge fund Beacon Rock Capital engage in tens of thousands of fraudulent market-timing trades. Gerbasio helped design a strategy to allow Portland, Ore.-based Beacon Rock, which closed its hedge fund business in 2003 and has since split and rechristened itself the Beacon Investment Group, to skirt market-timing and trading limits imposed by mutual funds.

For its role in the scheme, Beacon—which pleaded guilty to one count of securities fraud last year—was sentenced to three years’ probation and will pay more than $1 million in forfeitures and fines. Gerbasio received two years of supervised release and was order to pay a $7,500 fine.

RELATED STORIES

Beacon Rock Cops A Plea
Beware The Beacon: Charged Fund Plays Name Game
Beacon Rock Changes Ownership, Name


In Depth

OmniQuest Capital: Why Funds of Hedge Funds Work

Aug 11 2016 | 4:47pm ET

There have been few sectors of the alternative investment universe under as much...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...