Securities Law Prof Blog

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

Friday, March 23, 2007

Criminal Market Timing Charges Brought Against Hedge Fund

The SEC announced today that Beacon Rock  Capital  LLC  (Beacon Rock), a hedge  fund  located  in  Portland,  Oregon,  and  Thomas  J. Gerbasio (Gerbasio), a  former  securities  registered  representative with a registered broker-dealer based in Philadelphia, were criminally charged in connection with a scheme to defraud mutual funds and  their shareholders of approximately $2.4 million. In an Information filed on March 20,  2007,  the  U.S.  Attorney  for  the  Eastern  District  of Pennsylvania (U.S. Attorney) charged that  Beacon  Rock  and  Gerbasio engaged in a scheme to evade and circumvent  controls  implemented  by mutual funds seeking to restrict  market  timing.  This is the first U.S.  criminal  case  against  a hedge fund for deceptive market timing.

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