Securities Law Prof Blog

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

Wednesday, April 8, 2009

SEC Gets Injunction Against Massachusetts Hedge Fund Manager

The SEC announced today that the Massachusetts federal district court entered a Final Judgment on April 8, 2009 against defendant Glenn Manterfield, a citizen of the United Kingdom, in connection with a civil injunctive action filed in April 2007 by the Commission against Manterfield, his business partner, and Lydia Capital, LLC, a registered investment adviser based in Boston, Massachusetts. The Final Judgment enjoined Manterfield, a principal of Lydia, from engaging in future violations of the antifraud provisions of the federal securities laws and holds him liable for $2,350,000 in disgorgement of profits from the conduct alleged in the Commission's complaint, plus prejudgment interest of $425,998, and a civil penalty in the amount of $130,000.

According to the SEC, from June 2006 through April 2007, Manterfield and his business partner, Evan K. Andersen, acting through Lydia, engaged in a scheme to defraud more than 60 investors, who invested approximately $34 million in Lydia Capital Alternative Investment Fund LP, a hedge fund managed by Lydia. The Amended Complaint alleges that defendants told investors that they intended to use the hedge fund's assets to acquire a portfolio of life insurance polices in the life settlement market. According to the Amended Complaint, Manterfield, Andersen, and Lydia made a series of material misrepresentations and omissions, including: (1) materially overstating, and in some instances completely fabricating the hedge fund's performance; (2) inventing business partners, offices, and investors in an attempt to legitimatize the firm and concealing the truth as to why key vendors and banks ceased relationships with the defendants; (3) lying about Manterfield's significant criminal history, and failing to disclose a February 2007 criminal asset freeze against him in England; (4) lying about how the hedge fund planned to address certain material risks and failing to disclose others; and (5) misstating the nature of the hedge fund's assets and its investment process. In addition, the Amended Complaint alleges that Manterfield and Andersen took millions of dollars of investors' funds by withdrawing investor monies to which they were not entitled.

The Final Judgment permanently enjoined Manterfield from violating the federal securities laws and holds Manterfield liable for $2,350,000 in disgorgement, plus prejudgment interest of $425,998, and a civil penalty in the amount of $130,000. Andersen has settled the Commission's action against him, and the action is still pending against Lydia.

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