New York (HedgeCo.Net) – NY attorney Preet Bharara has announced that Stephen Walsh and Paul Greenwood, co-founders of hedge fund advisory and investment company, WG Trading Company, and WG Trading Investors, were sentenced in Manhattan federal court in connection with a fraudulent commodities trading and investment advisory scheme.

Walsh was sentenced to 20 years in prison, and Greenwood was sentenced to 10 years in prison.

Greenwood pleaded guilty in 2010 to securities fraud, admitting that he cheated charities, schools, pension funds and others out of hundreds of millions of dollars.

“I have lied. I have cheated. I have stolen,” Greenwood told the judge, hoping for leniency. “Words can’t express my contrition. . . . I am truly sorry for the grief and the heartache my actions have caused.”

From at least 1996 through February 2009, Walsh and Greenwood solicited $7.6 billion in investor funds on the understanding that they would invest the funds in a program called “equity index arbitrage,” which they represented was a conservative trading strategy that had outperformed the results of the S&P 500 Index for more than 10 years.

As a result, several institutional investors – including charitable and university foundations, and retirement and pension plans – invested billions of dollars. Investors either became limited partners in WG Trading Company or received promissory notes issued by WG Trading Investors that WALSH and Greenwood represented would pay interest at a rate equal to the investment returns earned by a limited partner of WG Trading Company.

Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
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