Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, February 26, 2007

Settled Fraud Charges Against Hedge Fund Adviser

The SEC filed a settled civil injunctive action against a hedge fund adviser, Crestview Capital Partners, LLC (Crestview), and one of its managing members, Stewart R. Flink, charging them with making fraudulent representations in connection with investments by Crestview-managed funds (Crestview funds) in two registered direct offerings. Registered direct offerings generally are characterized as privately negotiated sales of securities by public companies pursuant to an effective shelf registration statement. Crestview and Flink made false representations in the offering documentation for the two registered direct offerings that Crestview funds had not shorted the respective issuer's stock in the ten trading days preceding the signing of the documentation. Without admitting or denying the Commission's allegations, Crestview and Flink agreed to a civil injunction for violations of the federal securities laws. In addition, Crestview agreed to pay $394,640 in disgorgement and civil penalties and to retain an independent consultant to monitor Crestview's compliance procedures. Flink agreed to pay $120,000 in civil penalties.

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