Securities Law Prof Blog

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

A Member of the Law Professor Blogs Network

Tuesday, February 5, 2008

SEC Settles Late Trading Charges with Ritchie Capital

The SEC settled an enforcement action against a hedge fund, its investment adviser, its founder and CEO, and two employees for their roles in an illegal late trading scheme.  The SEC charged hedge fund Ritchie Multi-Strategy Global Trading Ltd. and its Chicago-based adviser — Ritchie Capital Management LLC — as well as Ritchie Capital’s founder and CEO A.R. Thane Ritchie and employees Warren DeMaio and Michael Mauriello. They will pay a combined total of approximately $40 million to settle the SEC’s charges. These payments will be distributed to the affected mutual funds.

The SEC's Order finds that from January 2001 through September 2003, Ritchie Capital engaged in an illegal late trading scheme, placing thousands of late trades in mutual fund shares.  Thane Ritchie approved the use of late trading by Ritchie Capital’s mutual fund group and oversaw its performance. DeMaio supervised mutual fund trading at Ritchie Capital and was involved in the development of the late trading strategy. Mauriello was responsible for placing mutual fund late trades with brokers on behalf of Ritchie Capital. Ritchie Capital’s post-4 p.m. trading resulted in a profit of approximately $30 million to the Ritchie Multi-Strategy fund.

The Commission’s Order requires Ritchie Multi-Strategy Global Trading Ltd. and Ritchie Capital Management LLC to pay disgorgement, jointly and severally, of $30 million, and prejudgment interest thereon of approximately $7.4 million. Ritchie Capital and Ritchie will pay civil penalties, jointly and severally, totaling $2.5 million. DeMaio will pay $250,000 in civil penalties. These payments will be distributed to the affected mutual funds.

http://lawprofessors.typepad.com/securities/2008/02/sec-settles-lat.html

SEC Action | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef00e5502bc1328834

Listed below are links to weblogs that reference SEC Settles Late Trading Charges with Ritchie Capital:

Comments

Post a comment