Thursday, 24 July 2014
Last updated 50 min ago
May 23 2008 | 11:08am ET
The Securities and Exchange Commission yesterday filed a civil injunctive action alleging antifraud violations against James Marquez, a portfolio manager and principal of failed Connecticut hedge fund Bayou Fund. Marquez and the SEC have settled the charges.
The complaint alleges that from 1996 until October 2001, Marquez and his partners, Samuel Israel and Daniel Marino, systematically hid from investors Bayou's mounting trading losses by lying about the fund's performance in account statements and promotional materials. The SEC further alleges that, with Marquez's knowledge, Bayou created a sham accounting firm known as Richmond-Fairfield Associates to issue and certify phony "independent" yearly audits of the Bayou's performance, and that, beginning in 1998, Bayou distributed fabricated audit opinions by Richmond-Fairfield attesting to the accuracy and truthfulness of the fund's year-end financial statements.
Marquez, Israel and Marino carefully concocted Bayou's artificial earnings to create the appearance that the fund had achieved modest, steady and believable growth, which enabled the firm to attract millions of dollars in new investor capital, according to the complaint. Marquez dissociated himself from Bayou in October 2001 but took no steps to expose Bayou's continuing fraudulent scheme, the SEC says.
In 2006, Marquez pleaded guilty to one count of criminal conspiracy for his conduct relating to Bayou and was sentenced in January to 51 months in prison and ordered to pay $6.2 million in criminal restitution.
Marquez has agreed to settle the charges by consenting, without admitting or denying the allegations in the SEC's complaint, to the entry of a final judgment permanently restraining and enjoining him from future violations of the antifraud provisions of the federal securities laws.
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…