SEC Takes Action Against Hedge Fund Manager

by Philip Morton, Investors Offshore.com

15 July 2003

The US Securities and Exchange Commission (SEC) has accused the Lancer Management Group of using fraudulent trading practices and false valuations to attract new investors to several of its hedge fund offerings.

In a complaint filed last week at Florida's Southern District Court, the SEC alleged that Lancer's principal, Michael Lauer, and other defendants including Lancer Offshore, Lancer Partners, Omnifund Ltd, LSPV Inc, and LSPV LLC had systematically manipulated month-end closing prices of securities held by Lancer hedge funds in order to overstate their value.

According to reports, the SEC has also claimed that the hedge fund manager made false and misleading claims in its marketing materials.

The Commission announced on Friday that it has won a temporary restraining order freezing all of the Lancer Group's assets, and that it is seeking disgorgement, civil fines, and other penalties against the firm.

The BVI-based Lancer Offshore hedge fund filed for Chapter 11 protection in May, marking the first time that a hedge fund has ever done so.

Explaining its parallel decision to request that the two parent companies of the fund be placed under administration, the British Virgin Islands Financial Services Commission announced that:

'The Commission is of the opinion that the defendants are carrying on or are likely to be carrying on business in a manner detrimental to the interests of its investors.'

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