Cotal Systems Inc

Description

Please refer to CheckFundManager for documents that supersede this page. On September 30, 2003, newly appointed SEC Chairman William H. Donaldson testified before the U.S. Senate Committee on Banking and walked a political tightrope with regards to hedge-fund regulation and registration of hedge fund advisers. New York Attorney General Eliot Spitzer's recently announced a $40 million settlement with Canary Capital Partners, a hedge fund that allegedly engaged in illegal trading schemes with several large mutual-fund companies. Spitzer alleges that Canary engaged in two fraudulent schemes: late trading and market timing. He is investigating several other firms with regards to similar fraud. Spitzer's efforts lead to the prosecution of Steven Markovitz, a former hedge fund trader with Millennium Partners, who pleaded guilty to securities fraud and engaging in illegal late-day trading. Merrill Lynch then fired three brokers who had dealings with Millennium Partners. Paul Roye, director of investment management at the SEC, said at a recent Investment Company Institute conference: "In recent years, as hedge fund assets have grown, we have also seen an unfortunate growth in hedge fund-related fraud, The Commission has had to bring far too many hedge fund fraud cases in circumstances where the losses to investors have been substantial. The Commission will continue to be vigilant in identifying those cases." Our goal is to identify the hedge funds and fund managers who could expose your capital to undue risk. Here are some examples taken from our inventory of over 16,000 background checks we have conducted on hedge fund managers. Over the years, we have helped to protect the capital base of hundreds of capital market and other companies that invest in these alternative investments. For the first example, one investment firm we evaluated has 12 Federal Civil suits against them for misleading investors. They won control of the company by promising the shareholders they would either buy out their stock or sell the company. What they acutally did was to appoint themselves to the board of directors, approve huge salaries for themselves, and then say they could not sell the company because of the cost of the payouts to executives! Would you want this firm handling your money today? Over time, we have found a court case or some other exception in about 15% of the cases. Please view the statistical distribution of these findings. Members of our service can also view a detailed explanation (pdf) of our Due Diligence report. Most of the people we research are clean, honest, respectable individuals with unblemished records. Would it surprise to to learn though that an active manager of a mutual fund we evaluated had his securities registration revoked for 5 years, all of his trading priveledges suspended, and was fined $150,000 yet is back in business today? His offenses included CHEATING, DEFRAUDING, FALSE STATEMENT OR RECORDS, BUCKETING OR OFFSETTING ORDERS, FICTITIOUS SALES, and REPORTING NON BONA-FIDE PRICES.

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