Thursday, 11 February 2016
Last updated 5 hours ago
Jun 30 2009 | 2:14am ET
A defunct British hedge fund has settled U.S. charges that it illegally market-timed and attempted to late-trade mutual fund shares, the Securities and Exchange Commission said.
The Headstart Fund agreed to pay $17 million to settle the charges, filed last year. The extinct fund’s adviser, Headstart Advisors, will pay $200,000, while Najy Nasser, the firm’s chief investment officer, will pay $600,000. Headstart did not admit or deny the SEC’s allegations. Headstart and Nasser were also barred from future violations.
Headstart, while still manages three other hedge funds and a fund of hedge funds, said it was “very pleased” to settle the case.
According to the SEC, the Headstart Fund netted nearly $200 million from the allegedly illicit trading from 1998 through 2003.
The SEC complaint includes a firm document allegedly instructing employees to use “Shakespeare, TV shows or comics” to name new accounts and trading subsidiaries to fool the mutual fund companies, as they are “an untapped pool of names.”
“The Classics have been done to death,” the document reportedly said.
The regulator also cited a July 2003 effort by the hedge fund to allegedly cancel a mutual fund trade after the 4 p.m. deadline.