SEC Charges Atlanta Hedge Fund Operator With Fraud

by Carla Johnson, Investors Offshore.com

26 August 2005

The Securities and Exchange Commission has charged a former hedge fund operator based in Atlanta with civil fraud after he is alleged to have lied about his fund's returns in order to lure new clients into investing.

Barry Alan Bingham, who is currently serving a 366 day prison term for defrauding his clients, has been accused by the SEC of using false and misleading statements to tempt investors into his Bingham Growth Partners L.P. fund, run through an unregistered investment adviser called Bingham Capital Management, according to a complaint filed in a US district court in Georgia.

The SEC says that Bingham succeeded in convincing clients to invest $1.8 million into the fund, $460,000 of which was invested after he lied about the fund's past returns. The regulator also believes that Bingham stole money from the fund, which, by November 2002, had run out of assets due to a combination of trading losses and misappropriation of funds.

The SEC has acted against several allegedly fraudulent hedge funds this year and in the last five years has issued 52 enforcement actions against legitimate and bogus hedge fund managers. In an attempt to cut down on hedge fund fraud, funds that manage more than $30 million in assets for 15 or more clients will from next year have to register as investment advisers with the SEC.

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