U.S. regulators have imposed a permanent commodities trading ban against New York-based hedge fund Linuxor Asset Management and its principal, Abbas Shah. The Commodity Futures Trading Commission has also imposed a $200,000 fine on Shah and his money management shop.
The ruling follows a 2005 complaint charging Shah and Linuxor with defrauding fund participants in the Linuxor Global Macro Fund. Shah managed the hedge fund, served as its principal, and acted as its trading advisor.
Specifically, the order finds that Shah and Linuxor committed fraud by misrepresenting the value of the Linuxor Global Macro Fund. In one instance, Shah sent an email that materially misrepresented the net asset value of the fund by approximately $4 million, and another email falsely claimed success in recovering prior substantial losses.
The order also finds that the defendants failed to send to fund participants the required quarterly statements for 2002 to 2004 and a timely annual report for 2002. The defendants also commingled participants’ funds with the property of others, in violation of CFTC regulations.