Wednesday, December 21, 2005

SEC Sues Hedge Fund Operators to Recover Assets

The SEC sued HMC International, its manager, Robert M. Massimi, and chief trader, Bret A. Grebow, for fraud and diversion of assets from the fund that collapsed in September.  The Commission alleges that the defendants (and Massimi's wife) took $5.2 million in fund assets for personal use.  One red flag about the fund, into which approximately 80 investors placed almost $13 million, is that its stated investment style was "low-risk day trading" -- an investing oxymoron if there ever was one.  The SEC Litigation Release (here) states:

Massimi and Grebow sent investors false monthly account statements that portrayed their investments as profitable when, in reality, Grebow was systematically looting the Fund's trading account and Massimi was continually benefiting from lucrative "profit" distributions and unauthorized expenses that he paid to himself and Grebow from new investor funds. Massimi also falsely assured investors that he was a hands-on manager, who maintained diligent oversight of the Fund's assets and trading. The Commission further alleges that, recently, as Massimi faced increasing investor concerns about the Fund's legitimacy and government inquiries into his misconduct, Massimi diverted assets to others, including the Relief Defendant, to shield them from investors and government authorities.

A Dow Jones Newswire story (here) notes that Grebow purchased, among other items, a $160,000 Lamborghini Gallardo and that Massimi moved $100,000 last month from a fund account into a bank account in his and his wife's name. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/12/sec_sues_hedge_.html

Civil Enforcement, Fraud, Securities | Permalink

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Comments

I WAS ONE OF THOSE SUCKER INVESTORS, BUT THE WORST PART IS THE SEC, ATT GEN , WONT EVEN TALK OR RELEASE ANY INFO ABOUT THIS , ANY THOUGHTS JOE

Posted by: Joe Nicolich | Jan 29, 2006 4:35:07 PM

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