WEST PALM BEACH, FL (www.hedgeco.net) – The U.S. Securities and Exchange Commission [SEC] has charged a hedge fund manager with fraud for allegedly lying and deceiving investors. According to the SECCharges, Jon Hankins of Tenet Asset Management Company a 33-year old fund manager in the Convertible Opportunities fund was accused of providing investors with inflated double-digit gains, while atthe same time, his fund was losing money.
According to the report, the U.S. District Judge Kimba Wood had removed Jon Hankins from trading activities at Tenet Asset Management. Wood also appointed a receiver to manage the day-to-day affairs at the Tenet�s Convertible Opportunities Fund. The SEC filed an emergency action against the hedge fund manager last week, according to court documents.
Hankins launched his hedge fund in 2004, with about $22 million from a group of 17 clients according to the report. SEC lawyers said Hankins invested the client�s assets in a convertible arbitrage vehicle and had lost about $20 million in unprofitable trades. The lawyers for the SEC said his trades soon soured when Hankins bet that Google’s stock would decline in value when in fact Google�s stock kept appreciating. Hankins lied to investors through falsified documents according to the report.
Helene Glotzer one of the SEC lawyers said, “We allege that he concealed losses and poor performance both by telling investors and by altering financial statements.� Hankins tried to woo new investors by telling them that his fund had gained 32.4 percent between April 2004 and December 2004, at that time Hankin’s fund had lost about 24.5 percent. In 2005, things got out of control for Hankin’s fund when it lost 20 percent in April alone, and 40 percent in May. Convertible Arbitrage strategy took a hit during the first five months of 2005, following the downgrading of General Motors and ford Motors bond rating to a near junk status.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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