Wednesday, 30 July 2014
Last updated 3 hours ago
May 20 2008 | 10:23am ET
William Galvin’s crusade for tighter hedge fund controls continues.
The Massachusetts secretary of the commonwealth has charged hedge fund manager Michael Regan with improperly soliciting investors, the same allegation he leveled at New Jersey activist hedge fund shop Bulldog Investors and its colorful leader, Philip Goldstein.
Galvin’s securities division alleges that Regan’s River Stream Fund failed to adequately determine whether his roughly 60 clients were wealthy enough to invest in hedge funds. It also said that Regan was neither a registered investment adviser or adviser representative, and that River Stream was also not registered. But the regulator also found more than a hint of other improprieties that may indicate that investors won’t be seeing their money again.
Near an office where Regan said he worked, investigators reportedly found River Stream client data in a dumpster, as well as a brokerage statement indicating that the fund—which Regan allegedly claimed was managing $15 million, with at least one investor telling Galvin’s office he gave Regan $1.5 million a dozen years ago—has just $1,625.45 as of the end of last month.
According to Galvin, that may not be the only thing Regan, of Wayland, Mass., lied about.
The securities division said that Regan claimed to have an MBA in finance from Columbia Business School (he did not), and promised returns of between 10% and 20% per year.
“This is another example of the need for additional oversight of the hedge fund industry,” Galvin said. “Because of the absolute lack of required oversight, people may lose their homes, their retirement funds, or have difficulty funding education for their children.”
The securities division is seeking a cease-and-desist order against Regan, as well as fines.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…