Article: SEC Focuses on Efforts by Hedge Fund Managers to Conceal Poor Performance

Article - Media, Publications

SEC Focuses on Efforts by Hedge Fund Managers to Conceal Poor Performance

Caryn Mazin Schechtman; Perrie M. Weiner,  02 November 2008

The SEC has charged a San Francisco investment adviser, MedCap Management and Research LLC (MMR), and its principal, Charles Toney, Jr., with falsely inflating the price of a thinly-traded portfolio security to enhance fund asset values at the end of a reporting period so that it could avoid reporting a 40 percent loss and stave off a rash of investor redemptions. This practice, which the SEC calls “portfolio pumping,” is alleged by the SEC to violate the antifraud provisions of the Investment Advisers Act of 1940. The charges were filed October 16.

MedCap Partners L.P. (MedCap), a fund managed by Toney and MMR, was plagued by poor performance and investor redemptions in 2006. According to the SEC, facing mounting losses in the third quarter of the year, Toney and MMR allegedly placed numerous buy orders during the last few days of the quarter in a thinly traded over-the-counter security heavily owned by MedCap through another MMR-controlled fund. The SEC alleges that this purchasing activity caused the portfolio security to quadruple and fraudulently increased MedCap’s value for the third quarter of 2006 by $29 million; both the stock price of the underlying security and MedCap’s value subsequently declined back to their previous levels. Continue reading “Article: SEC Focuses on Efforts by Hedge Fund Managers to Conceal Poor Performance”

Article: Naked Justice?

Article - Media, Publications

Naked Justice?

Liz Moyer, 29 August 2006

Louisiana State Attorney General Charles Foti is trying to force UBS, the Wall Street investment bank, to turn over vast quantities of information on its trading, stock lending and other activities related to shares of software firm Sedona.

The Louisiana Department of Justice filed documents in a state court Tuesday to compel UBS to hand over the information in ten days.

The state is probing naked short-selling, which is the practice of selling shares short without borrowing them. It is an issue that has already been raised in reference to Sedona Sedona. in an ongoing civil lawsuit against a number of brokers and hedge funds and in a Securities and Exchange Commission federal court case filed in April in New York against one brokerage and several individuals. Continue reading “Article: Naked Justice?”