Two Hedge Funds Bounced For Fraud

Sep 22 2008 | 1:07pm ET

A pair of hedge funds was put out of business last week by regulators for alleged fraud.

The Massachusetts federal district court entered a final judgment against Evan Andersen and Lydia Capital, a registered hedge fund based in Boston, from future violations of the antifraud provisions of the federal securities laws. The court also held Andersen liable for $2.3 million in disgorgement, plus prejudgment interest of $177,089.

The court, however, ruled that Andersen must pay only $1.8 million and did not impose a civil penalty, based on his financial condition. Andersen consented, without admitting or denying the allegations, to the court’s final judgment. The Securities and Exchange Commission’s case against Lydia and Anderson’s co-principal, Glenn Manterfield, are pending.

The agency last May filed an emergency action against Andersen and Manterfield, alleging that between June 2006 and April 2007 the duo duped more than 60 investorsout of approximately $34 million in the Lydia Capital Alternative Investment Fund.

The SEC’s complaint alleged that the pair withdrew millions of dollars of investors’ funds to which they were not entitled, among other fraudulent acts.

Azure Bay Management was sunk by a fraud judgment related to its Addington Fund.

The U.S. District Court for the Western District of Michigan entered a final judgment against Daniel Jones and Azure Bay, enjoining the former from violating federal securities laws and ordering him to pay disgorgement of $2.5 million and prejudgment interest of $380,345.

The SEC did not seek a civil penalty and, based on the financial condition of Jones and Azure Bay, waived its right to pursue payment of all but $467,702 of the disgorgement.

Jones pleaded guilty to one count of wire fraud on April 1 and was sentenced to 21 months in prison in August.


In Depth

Q&A: Fund Administration Comes To The Cloud

Jul 14 2017 | 7:23pm ET

The fund administration sector has been steadily implementing new technology, such...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Rastegar: PE Real Estate Gains Momentum as Uncertainty Rises

Jul 21 2017 | 6:04pm ET

The steady march of equity markets and fundamental shift in the direction of Fed...