SEC says UK hedge fund defrauded U.S. mutual funds

SEC says UK hedge fund defrauded U.S. mutual funds
Reuters - Thursday, April 10 06:20 pm

NEW YORK (Reuters) - Hedge fund Headstart Advisers Ltd was sued by U.S. securities regulators on Thursday in a civil lawsuit contending the fund defrauded U.S. mutual funds through improper trading.

The U.S. Securities and Exchange Commission said in court papers that Headstart and its investment adviser, Najy Nasser, orchestrated a scheme to defraud mutual funds and their shareholders through late trading and deceptive market timing.

The Headstart fund earned illicit profits of about $198 million (100.3 million pounds) through the activity, the SEC said in the complaint, filed in U.S. District Court in Manhattan. The fund had assets under management of at least $500 million at one point, the SEC said.

A Headstart representative could not immediately be reached for comment.

The SEC said it is seeking to force the defendants to disgorge alleged ill-gotten gains from the trading activity.

Last week, the SEC sued another UK-based hedge fund, Pentagon Capital Management Plc, contending it engaged in late trading and deceptive market timing.