WEST PALM BEACH, FL (www.hedgeco.net) – The U.S. Securities and exchange Commission {SEC} has charged three former hedge fund managers with fraud. The men were suspected of stealing about $3.5million from their clients through a small hedge fund which they oversaw. According to published reports, the SEC lawyers tried last week to force the men to return such assets, and also to pay civilcharges, but such effort apparently failed.
According to court papers filed in the Southern District Court of Florida, Peter Krieger, his father Sheldon Krieger, and John Madey were charged by the SEC of stealing the sum of $3.5 million from their client�s assets. The SEC also alleges that the former hedge fund managers sent out false reports to a group of 45 clients who invested a total of $7.5 million with the managers. Such fake reports enabled the managers to hide their deeds in 2000.
One of the managers, Peter Krieger allegedly used part of the money to buy designer clothes, jewelry, and to pay for other expenses, while his father used part of the money to pay for mortgages according to SEC court papers. The fund went out of business in 2001. The three former managers could not be reached for statements.
Fraud in the hedge fund industry is very small compared to the level of assets being managed. Hedge fund managers have also increased transparency to their investors. Starting in 2006, all U.S. based hedge fund managers with over 15 clients, or overseeing over $30 million in investor assets will be forced to register their funds with the SEC. However an existing loophole will allow managers with up to 2 years in lock-up period to escape such oversight.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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