WEST PALM BEACH, FL (HedgeCo.Net) – The Securities and Exchange Commission has barred a former senior trader at Lipper Holdings LLC from the securities industry. According to released statements,Edward Strafaci pleaded guilty to charges of securities fraud filled against him by the SEC. Strafaci was charged with overstating the value of assets in some Lipper portfolios in 2002.
In 2002, Lipper management explained to its investors in a letter that the �losses were incurred in two portfolios; Lipper Convertibles, L.P., and Lipper Offshore convertibles. Lipper also said, �California energy crises, the decline of telecom, September 11, Enron fallout, recession and �war� status-have impacted the financial markets and Lipper�s portfolio of convertible securities�.
Strafaci was Lipper�s convertible portfolio manager who handled both funds, he departed unexpectedly and an internal team of fixed income professionals conducted a review of the names in those portfolios. They decided that a more cautious valuation, on a marked to market basis was needed. As a result of the review, the Lipper Convertibles, L.P. had a net reduction of $400m, while the Lipper Offshore Convertibles was reduced by $148m.
According to court papers, Strafaci admitted in the Manhattan federal court that he deceived investors through his misleading action by overvaluations of the portfolios in question. Strafaci valued the two portfolios at $722 million according to prosecutors; however they were liquidated at $365 million. Strafaci will be sentenced on Dec. 2, and he faces up to 10 years in prison.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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