Wednesday, September 5, 2007
On September 4, the SEC issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (Order) against Brent William Federighi, who previously ran two San Francisco-based hedge funds known as Ilytat and Gage Capital. The Order finds that on Aug. 22, 2007, a final judgment was entered by consent against Federighi, permanently enjoining him from future violations of Rule 10b-5. The Commission's complaint alleged that from 2000 to 2003, Federighi, who co-managed the Ilytat hedge fund and later managed the Gage hedge fund after Ilytat closed, deliberately exploited a loophole in the mutual fund order entry system used by the hedge funds' broker in order to place mutual fund trades after the 4:00 p.m. (Eastern time) market close while still receiving the current day's mutual fund price. Some trades were placed as late as 5:45 p.m. (Eastern time). Based on the above, the Order bars Federighi from association with any investment adviser with the right to reapply after 18 months. Federighi consented to the issuance of the Order without admitting or denying any of the findings, except he admitted to the entry of the
injunction. (Rel. IA-2641; File No. 3-12743).