British Hedge Fund Headstart Settles Market-Timing Case

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.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...