SEC Sues Nadel For Fraud; Investigators Find Little Money Left

Jan 22 2009 | 12:35am ET

Arthur Nadel is no longer merely a missing hedge fund manager. He’s a missing hedge fund manager who’s been charged with fraud.

The Securities and Exchange Commission yesterday sued Nadel, who heads Sarasota, Fla.-based hedge fund Scoop Management, alleging that he misled investors and inflated the value of the six funds he managed. The agency also won a freeze of Nadel’s assets, as well as those of the suit’s other defendants.

Nadel disappeared last week, leaving behind a suicide note. But in a case with parallels to Bayou Group founder Samuel Israel’s disappearance last year, authorities do not believe that Nadel has killed himself, and reportedly traced him to the New Orleans area this past weekend.

According to the SEC’s charges, filed in federal court in Tampa, Fla., Nadel overstated the value of his hedge funds by about $300 million; the $50 million in payouts he owed investors last week are apparently all that was left in the funds. Of course, even that $50 million may not exist: The SEC says that Nadel’s funds appear to have less than $1 million in assets. In addition, authorities believe Nadel recently transferred at least $1.25 million from two of his funds to himself.

In addition to Nadel and the Scoop entities, the lawsuit named several relief defendants, including Valhalla Management and Viking Management, investment firms that Nadel subadvised funds for, as well as his six funds. With the exception of Nadel himself, all of the other defendants agreed to the asset freeze without admitted or denying the charges.

"Investors should be able to rely on the truthfulness of an account statement and offering materials," David Nelson, who heads the SEC’s Miami office, said. "Mr. Nadel's alleged actions deceived investors, and we are seeking to hold him accountable for that misconduct."

While the Sarasota County Sheriff’s Office has closed its missing persons investigation of Nadel, the SEC and Federal Bureau of Investigation continue to search for him.

RELATED STORIES

Nadel ‘Doesn’t Want To Be Found,’ Sheriff Says
Fla. Hedge Fund Manager Disappears With $350 Million


In Depth

Prominent Hedgie Renee Haugerud Embroiled in Ugly Child Custody Battle

Sep 10 2014 | 2:43pm ET

A high-profile hedge fund manager is caught up in a nasty child custody battle in...

Lifestyle

Full House’s Stamos To Play TV Hedge-Fund Manager

Sep 5 2014 | 4:43am ET

The life of a Connecticut hedge-fund billionaire is coming to the small screen.

Guest Contributor

The Cult of Loss Aversion: A Call to Rethink Risk in Global Macro Investing

Sep 4 2014 | 5:45am ET

In the wake of a traumatic loss, whether it is financial or personal, it is just...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.