In re TONY AHN

 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
                                                 UNITED                                                 STATES OF AMERICA 

                                                                     Before                                                                     the                                                                     

                                    SECURITIES                                    AND                                    EXCHANGE COMMISSION 

SECURITIES EXCHANGE ACT OF 1934 
Release No. 63963 / February 24, 2011 
ADMINISTRATIVE PROCEEDING 
File No. 3-14272 
In the Matter of 
TONY AHN,  
Respondent. 
ORDER INSTITUTING 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS PURSUANT 
TO SECTIONS 15(b) AND 21C OF THE 
SECURITIES EXCHANGE ACT OF 
1934, MAKING FINDINGS, AND 
IMPOSING REMEDIAL SANCTIONS 
AND A CEASE-AND-DESIST ORDER 
I. 
The Securities and Exchange Commission (“Commission”) deems it appropriate 
and in the public interest that public administrative and cease-and-desist proceedings be, 
and hereby are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange 
Act of 1934 (“Exchange Act”) against Tony Ahn (“Ahn” or “Respondent”).  
II. 
In anticipation of the institution of these proceedings, Respondent has submitted an 
Offer of Settlement (the “Offer”) which the Commission has determined to accept.  Solely 
for the purpose of these proceedings and any other proceedings brought by or on behalf of 
the Commission, or to which the Commission is a party, and without admitting or denying 
the findings herein, except as to the Commission’s jurisdiction over him and the subject 
matter of these proceedings, which are admitted, Respondent consents to the entry of this 
Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 
15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing 
Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
                                                
 
 
 
 
  
 
 
III. 
On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
Summary 
These proceedings arise out of the manipulation of the prices of a number of 
microcap issuer stocks between September 2005 and September 2007 (the “relevant 
period”) by Hunter World Markets, Inc. (“HWM”), Todd Ficeto (“Ficeto”), Florian 
Wilhelm Jurgen Homm (“Homm”), Colin Heatherington (“Heatherington”), and Ahn, in 
service of a larger fraud perpetrated on the investors in several now defunct hedge funds 
managed by Absolute Capital Management Holdings, Ltd. (“ACMH”).  Homm co-founded 
and was the co-chief investment officer for ACMH, a London-based hedge fund 
management company that purported to have $2.1 billion in assets under management as of 
August 31, 2007.  Homm abruptly resigned from ACMH on September 18, 2007.  The next 
day, ACMH announced that eight hedge funds it managed (the “Absolute funds”) held 
between $440 to $530 million in “illiquid positions.”  Most of these “illiquid positions” 
were, in fact, U.S.-microcap stocks purchased and traded by the Absolute funds primarily 
through HWM. 
As HWM’s primary trader, Ahn, executed numerous trades that manipulated 
upwards the price of the microcap stocks.  Ahn received the Absolute funds’ trade orders 
from Heatherington, who received his instructions from Homm.  Ahn would often 
communicate with Heatherington via an online instant messaging system in which they 
openly discussed trade orders.  The instant messages also reveal Ficeto’s knowledge and 
oversight of the scheme.  Some of the methods Heatherington, Homm, Ficeto and Ahn 
used to accomplish the price manipulation included matched orders between the various 
Absolute funds, marking the close in shares of several of the microcap companies, and 
wash trades between accounts held in the names of the same individual funds.   Many of 
these transactions were executed at the end of the day, and very often the end of the month, 
for the apparent purpose of marking the close to positively impact the Absolute funds’ net 
asset values (“NAVs”), thereby engaging in “portfolio pumping,” or materially overstating 
the hedge funds’ performance and NAVs before the end of the month.  At times, trades 
were back-dated to the previous month-end, also with the apparent purpose of portfolio 
pumping.  Homm, Ficeto, and Heatherington made millions of dollars through these 
manipulative trades as well as transaction fees paid to HWM. 
1 
The findings herein are made pursuant to Respondent's Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding. 
2
 

 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
   
 
 
 
 
 
 
 
 
 
Respondent 
1. Ahn was a registered representative from August 2005 to May 2008 
associated with HWM, a now defunct broker-dealer that had been registered with the 
Commission during the relevant period.   Ahn was HWM’s primary trader during the 
relevant period.  Ahn, 36 years old, is a resident of Fullerton, California. 
Other Relevant Individuals and Entities 
2. HWM is a California corporation formerly based in Beverly Hills, 
California.  During the relevant period, HWM conducted both a brokerage and investment 
banking business.  HWM was registered as a broker-dealer with the Commission from 
March 1996 through November 30, 2009, when HWM’s Form BDW, withdrawing its 
registration with the Commission as a broker-dealer, became effective.    
3. Ficeto was the co-owner of HWM during the relevant period, during which 
time Ficeto was also a director of the firm as well as a registered representative, trader, 
branch manager and general securities principal.   
4. Homm was the co-owner and a director of HWM during the relevant period.  
Homm was also the co-founder, the original chief investment officer and later the co-chief 
investment officer of ACMH.       
5. Heatherington was an ACMH trader and the employee in charge of back 
office operations during most of the relevant period.    
6. ACMH was organized under the laws of the Cayman Islands.  It was quoted 
on the London Alternative Investment Market and was registered with the Commission as 
an investment adviser until September 10, 2007.  During the relevant period, ACMH 
managed the Absolute funds, which were formerly domiciled in the Cayman Islands but 
have subsequently either been liquidated or are now managed by a different fund 
management company.  ACMH has no securities registered under the Exchange Act.    
Background 
7. During the relevant period, HWM, Homm, Ficeto, Heatherington and Ahn 
manipulated upward the prices of a number of thinly-traded microcap stocks or 
artificially maintained their prices, including some of those which HWM helped bring 
public, in return for placement fees and warrants and shares of stock.   
8. Generally, after the Absolute funds invested in a company through a private 
placement, HWM orchestrated a reverse merger to bring the companies public by merging 
the entity with a publicly traded shell company.  Following the reverse merger, the 
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companies prepared a Form SB-2 registration statement to register for re-sale the shares 
held by HWM in its name, by Heatherington’s company, and, in some cases, by the 
Absolute funds.  Following the registration statement going effective, the Absolute funds 
began selling their shares, mostly through matched orders placed between their HWM 
accounts, in order to walk the stock price upwards or to maintain an artificially high price.  
Many of the matched orders also set the closing prices for the stocks.  Additionally, HWM 
made purchases on behalf of the Absolute funds in the market to mark the close in the stock 
of a number of the issuers.  For some of the companies’ stock, nearly all of the trading 
volume during the relevant period resulted from trades executed through HWM.  Typically, 
the manipulative trading began with the Absolute funds trading among each other at low 
prices.  After the stock price had been artificially inflated, Ficeto, Homm and 
Heatherington would then sell their shares to the Absolute funds, reaping millions of 
dollars of profit as a result.  
9. Homm, Ficeto, Heatherington and Ahn used a number of different 
manipulative techniques to artificially inflate the microcap issuers’ stock price, including 
the use of matched orders, marking the close, wash sales and purchases at increasing 
prices.  As HWM’s primary trader, Ahn, following the instructions of Ficeto and 
Heatherington, executed nearly all of these manipulative trades.  Ahn also communicated 
with the Absolute funds’ point of contact, Heatherington, using an instant messaging 
system the text of which HWM failed to retain.  The instant messages reveal multiple 
examples of Heatherington stating the price at which he wanted a stock to close the day, 
discussions regarding the best way to achieve those prices, and back-dating trades so that 
the trades would fall on the last day of the month, and thus be included for a particular 
fund’s quarter-end performance.  One discussion between Ahn and Heatherington 
concerned selecting the best day to back-date a certain trade, so as to make it less 
suspicious because the trade’s predetermined price was significantly away from the 
market on the actual day it was executed. 
Manipulation of the Prices of Numerous Microcap Stocks 
10. The most frequent methods by which the issuers’ stock prices were 
manipulated were through purchases of the stocks at increasing, artificial prices and 
numerous matched orders, mostly executed between Absolute funds’ accounts held at 
HWM, as well as trades between the Absolute funds and accounts held in HWM’s name 
and accounts owned or controlled by Ficeto and Heatherington.    
11. An example of the price manipulation accomplished through matched 
orders occurred in shares of ProElite, Inc. (“ProElite”), a microcap issuer that HWM and 
Ficeto helped to bring public in May 2007.  HWM (in its own name), Ficeto, 
Heatherington, and the Absolute funds owned considerable stakes in ProElite, which HWM 
itself, Ficeto, and Heatherington had obtained at discounted prices or as part of HWM’s 
underwriting compensation.   
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12. On at least twenty-one days during the period September 2006 through 
September 2007, HWM marked the close in ProElite stock through matched orders either 
between accounts held at HWM or between accounts held at HWM and another broker, 
including at least three wash sales.  On most of these days, there were no other reported 
trades in ProElite stock other than matched orders in which HWM executed both sides of 
the trade or matched orders in which HWM was involved as a broker on one side of the 
trade. 
13. In January 2007, ProElite filed a Form SB-2 resale registration statement, 
effective May 14, 2007, for the sale of almost all of the shares held by HWM in its name, 
by Ficeto as custodian for his two minor children, over half of the shares held by 
Heatherington’s company and some of the shares held by the Absolute funds. 
14. On May 15, 2007, following the effective date of the Form SB-2, HWM, 
through Ahn, executed a series of cross trades (a) in three separate trades between different 
Absolute funds at $3.25 a share, (b) among an Absolute fund and HWM and 
Heatherington’s company at $8.00 a share, and (c) among an Absolute fund and the 
custodial accounts of Ficeto’s children at $12.00 a share.  Ahn, at the instruction of Ficeto 
and/or Heatherington, entered the cross trades within minutes of each other, all after the 
close of the market.  There were no significant announcements by the company that day or 
any other reason that would explain the increase in price.  Further, there were no other 
reported trades in ProElite stock that day other than those executed by HWM.   
15. As a result of the manipulation of ProElite’s stock price, HWM made 
significant profits.  Specifically, HWM sold $14.2 million worth of ProElite shares to the 
Absolute funds, as well as an additional $2.8 million to the Hunter Fund, an investment 
fund managed by Ficeto whose sole investors were three of the Absolute funds.  Ficeto 
individually and on behalf of his children sold $2.4 million to the Absolute funds, and 
Heatherington sold $8.7 million to the Absolute funds.  Additionally, HWM made $1.1 
million in sales credits, which HWM considered to be the equivalent of commissions.   
16. During the relevant period, HWM, Ficeto, Heatherington and Ahn 
manipulated the price of at least five other microcap issuers through matched orders.  As a 
result of that manipulative activity, HWM sold nearly $15.4 million worth of stock to the 
Absolute funds at artificially high prices, and made nearly $4 million in sales credits.  
Ficeto individually and on behalf of his children sold an additional $1.7 million worth of 
stock to the Absolute funds, and Heatherington sold $2.9 million in stock to the Absolute 
funds as well. 
17. HWM, Ficeto, Heatherington, and Ahn also marked the close in a number 
of the same microcap issuers’ stock.  Marking the close is the practice of executing 
purchase or sale orders at or near the close of the market with the intent to affect its closing 
price.  For example, at the end of 14 of the 15 months between January 2006 and March 
2007, HWM, Ficeto, Heatherington, and Ahn successfully marked the close in MicroMed 
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Cardiovascular.   Similar marking the close trades were executed through HWM in the 
stock of at least five other microcap issuers on over fifty occasions. 
18. Ahn, at the instruction of Ficeto and/or Heatherington, executed nearly all 
of the manipulative trades.  Most of the matched orders and desired closing prices were 
placed by Heatherington, either by telephone or through e-mail and instant messages, 
including through HWM’s archived e-mail system, as well as an alternate instant 
messaging system that HWM or Ficeto purposely did not retain.  While Ahn did not 
properly retain either the originals or copies of all of the instant messages, he did retain 
copies of a number of them in his personal files.   
19.            HWM,            Ficeto,            Heatherington and Ahn also executed a number of trades 
between two accounts held by the same fund, thus effecting at least four wash sales.  As 
with the other matched orders, the apparent purpose of those transactions was to 
manipulate the price of the issuers’ stock and/or to generate massive sales credits to HWM.  
Specifically, on June 18, 2007, the Absolute East West Fund Limited sold 500,001 shares 
of ProElite from one of its HWM accounts to another.  On June 26, 2007, the Absolute 
Activist Value Fund sold 250,000 shares of ProElite from one of its HWM accounts to 
another.  On September 13, 2007, the Absolute Octane Fund Limited sold 4.5 million 
shares of Quest Group to another of its HWM accounts, and sold 2.5 million shares of 
ProElite to another of its HWM accounts.  As a result of these trades, the firm made 
$615,000 in sales credits.  Two of the wash sales in ProElite constituted all of the trades on 
those days, and therefore effectively set the stock’s price.  Similarly, the wash trade in 
Quest Group stock artificially inflated its stock price as well.   
20.       HWM,       Ficeto,       Heatherington and Ahn also back-dated a number of trades.  
As detailed in certain instant messages, Heatherington asked Ahn to revise the trade date of 
certain transactions to reflect a date that was prior to month’s end.  For example, on 
September 4, 2007, Heatherington asked Ahn if a matched trade for 400,000 shares of 
ProElite traded among three of the ACMH funds could be back-dated to the previous 
Friday, the last trading day of the month.  Ahn responded that he would need to call Ficeto 
to obtain approval.  Ficeto approved the trade which was entered with an “as of” date of 
August 31, 2007. 
21. In a July 30, 2007 instant message exchange between Heatherington and 
Ahn, Heatherington proposed a matched trade at such a high price for the day that Ahn 
responded that it would “be a red flag to print [i.e., be reported] a lot above the high of the 
day.”   Apparently to avoid raising the red flag triggered by Heatherington’s proposed 
price, Ahn suggested back-dating the trade to the prior week, but noted that he would need 
to obtain Ficeto’s approval before so doing.  With Ficeto’s approval, Ahn entered the trade 
as of July 23, 2007, when the stock was trading closer to Heatherington’s initial proposed 
price. 
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Ahn Aided and Abetted HWM’s Failure to Preserve Instant Messaging Transcripts
 22. HWM is required to maintain originals or copies of all communications that 
relate to its business, including instant-messaging transcripts, for a period of three years.  
As detailed above, HWM failed to maintain originals or copies of the instant messages sent 
via the alternate instant message system.  By knowingly failing to maintain originals or 
copies of the instant messages in accordance with the requirements of Section 17(a) of the 
Exchange Act and Rule 17a-4(b)(4), Ahn willfully aided and abetted and caused HWM’s 
failure to maintain a record of those instant messages.  
Violations 
23. As a result of the conduct described above, Ahn willfully violated Section 
10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in 
connection with the purchase or sale of securities. 
24. As a result of the conduct described above, Ahn willfully aided and abetted 
and caused HWM’s violations of Section 15(c)(1) of the Exchange Act, which prohibits 
brokers and dealers from using manipulative, deceptive, or other fraudulent devices or 
contrivances in connection with securities transactions.   
25. As a result of the conduct described above, Ahn willfully aided and abetted 
and caused HWM’s violations of Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) 
thereunder, which requires brokers and dealers to retain originals of all communications 
received and copies of all communications sent relating to its business as such. 
Undertakings
            Respondent            undertakes            to:            
26. In connection with this public administrative proceeding and any related 
judicial or administrative proceedings or investigation commenced by the Commission or 
to which the Commission is a party, Ahn: (i) agrees to appear and be interviewed by 
Commission staff at such times and places as the staff requests upon reasonable notice; (ii) 
will accept service by mail or facsimile transmission of notices or subpoenas issued by the 
Commission for documents or testimony at depositions, hearings, or trials, or in connection 
with any related investigation by Commission staff; (iii) with respect to such notices and 
subpoenas, waive the territorial limits on service contained in Rule 45 of the Federal Rules 
of Civil Procedure and any applicable local rules, provided that the party requesting the 
testimony reimburses Respondent’s travel, lodging and subsistence expenses at the then-
prevailing U.S. Government per diem rates; and (iv) consent to personal jurisdiction over 
him in any United States District Court or administrative court for the purposes of 
enforcing any such subpoena. 
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In determining whether to accept Ahn’s Offer, the Commission has considered 
Ahn’s undertaking to cooperate as enumerated in Section III.26 above. 
IV. 
In view of the foregoing, the Commission deems it appropriate, in the public 
interest, to impose the sanctions agreed to in Respondent Ahn’s Offer. 
Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act, it is hereby 
ORDERED that: 
A. Respondent Ahn cease and desist from committing or causing any violations 
and any future violations of Sections 10(b), 15(c)(1) and 17(a) of the Exchange Act and 
Rules 10b-5 and 17a-4(b)(4) thereunder.  
B. Respondent Ahn be, and hereby is barred from association with any broker 
and dealer with the right to reapply for association after five (5) years to the appropriate self-
regulatory organization, or if there is none, to the Commission. 
C. Any reapplication for association by the Respondent will be subject to the 
applicable laws and regulations governing the reentry process, and reentry may be 
conditioned upon a number of factors, including, but not limited to, the satisfaction of any 
or all of the following:  (a) any disgorgement ordered against the Respondent, whether or 
not the Commission has fully or partially waived payment of such disgorgement; (b) any 
arbitration award related to the conduct that served as the basis for the Commission order; 
(c) any self-regulatory organization arbitration award to a customer, whether or not related 
to the conduct that served as the basis for the Commission order; and (d) any restitution 
order by a self-regulatory organization, whether or not related to the conduct that served as 
the basis for the Commission order. 
D. Respondent shall pay a civil money penalty in the amount of Forty 
Thousand Dollars ($40,000) to the United States Treasury.  Payment shall be made in the 
following four installments: (a) Ten Thousand Dollars ($10,000) to be paid within twenty-
one days of the entry of this Order; (b) Ten Thousand Dollars ($10,000) to be paid within 
six (6) months of the entry of this Order; (c) Ten Thousand Dollars ($10,000) to be paid 
within nine (9) months of the entry of this Order; and (d) a final payment of Ten Thousand 
Dollars ($10,000) to be paid within one year of the entry of this Order.  If any payment is 
not made by the date the payment is required by this Order, the entire outstanding balance 
of civil penalties, plus any additional interest accrued pursuant to 31 U.S.C. 3717, shall be 
due and payable immediately, without further application.  Payments shall be: (A) made by 
wire transfer, United States postal money order, certified check, bank cashier's check or 
bank money order; (B) made payable to the Securities and Exchange Commission; (C) 
hand-delivered or mailed to the Office of Financial Management, Securities and Exchange 
Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 
8
 

 
 
 
 
 
 
            
 
 
 
     
 
  
22312; and (D) submitted under cover letter that identifies Tony Ahn as a Respondent in 
these proceedings, the file number of these proceedings, a copy of which cover letter and 
money order or check shall be sent to Michele Layne, Associate Regional Director, 5670 
Wilshire Boulevard, 11
th
 Floor, Los Angeles, California 90036.   
E. Respondent acknowledges that the Commission is not imposing a civil 
penalty in excess of Forty Thousand Dollars ($40,000) based upon his agreement to 
cooperate in a Commission investigation and/or related enforcement action.  If at any time 
following the entry of the Order, the Division of Enforcement (“Division”) obtains 
information indicating that Respondent knowingly provided materially false or misleading 
information or materials to the Commission or in a related proceeding, the Division may, at 
its sole discretion and without prior notice to the Respondent, petition the Commission to 
reopen this matter and seek an order directing that the Respondent pay an additional civil 
penalty.  Respondent may not, by way of defense to any resulting administrative 
proceeding:  (1) contest the findings in the Order; or (2) assert any defense to liability or 
remedy, including, but not limited to, any statute of limitations defense.    
            By            the            Commission.
       Elizabeth M. Murphy
       Secretary 
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Service List 
Rule 141 of the Commission's Rules of Practice provides that the Secretary, or 
another duly authorized officer of the Commission, shall serve a copy of the Order 
Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) 
and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing 
Remedial Sanctions and a Cease-and-Desist Order ("Order"), on the Respondent and his 
legal agent. 
The attached Order has been sent to the following parties and other persons entitled 
to notice: 
Honorable Brenda P. Murray 
Chief Administrative Law Judge 
Securities and Exchange Commission 
100 F Street, N.E 
Washington, DC 20549-2557 
Lucee S. Kirka, Esq.  
Los Angeles Regional Office 
Securities and Exchange Commission 
5670 Wilshire Boulevard, 11
th
 Floor 
Los Angeles, CA 90036 
Mr. Tony Ahn 
c/o Edward S. Gelfand, Esq.  
Gartenberg Gelfand Wasson & Selden LLP  
801 S. Figueroa Street, Suite 2170  
Los Angeles, CA  90017 
Edward S. Gelfand, Esq.  
Gartenberg Gelfand Wasson & Selden LLP  
801 S. Figueroa Street, Suite 2170  
Los Angeles, CA  90017 
(Counsel for Tony Ahn) 
10
 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 


SECURITIES EXCHANGE ACT OF 1934 
Release No. 63963 / February 24, 2011 

ADMINISTRATIVE PROCEEDING 
File No. 3-14272 

In the Matter of 

TONY AHN,  

Respondent. 

ORDER INSTITUTING 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS PURSUANT 
TO SECTIONS 15(b) AND 21C OF THE 
SECURITIES EXCHANGE ACT OF 
1934, MAKING FINDINGS, AND 
IMPOSING REMEDIAL SANCTIONS 
AND A CEASE-AND-DESIST ORDER 

I. 

The Securities and Exchange Commission (“Commission”) deems it appropriate 
and in the public interest that public administrative and cease-and-desist proceedings be, 
and hereby are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange 
Act of 1934 (“Exchange Act”) against Tony Ahn (“Ahn” or “Respondent”).  

II. 

In anticipation of the institution of these proceedings, Respondent has submitted an 
Offer of Settlement (the “Offer”) which the Commission has determined to accept.  Solely 
for the purpose of these proceedings and any other proceedings brought by or on behalf of 
the Commission, or to which the Commission is a party, and without admitting or denying 
the findings herein, except as to the Commission’s jurisdiction over him and the subject 
matter of these proceedings, which are admitted, Respondent consents to the entry of this 
Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 
15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing 
Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.   



 

 

 
 
 

 
 
 

 

 
 

 

 
 

 

 

   

                                                 
  

   

 

 

III. 

On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

Summary 

These proceedings arise out of the manipulation of the prices of a number of 
microcap issuer stocks between September 2005 and September 2007 (the “relevant 
period”) by Hunter World Markets, Inc. (“HWM”), Todd Ficeto (“Ficeto”), Florian 
Wilhelm Jurgen Homm (“Homm”), Colin Heatherington (“Heatherington”), and Ahn, in 
service of a larger fraud perpetrated on the investors in several now defunct hedge funds 
managed by Absolute Capital Management Holdings, Ltd. (“ACMH”).  Homm co-founded 
and was the co-chief investment officer for ACMH, a London-based hedge fund 
management company that purported to have $2.1 billion in assets under management as of 
August 31, 2007. Homm abruptly resigned from ACMH on September 18, 2007.  The next 
day, ACMH announced that eight hedge funds it managed (the “Absolute funds”) held 
between $440 to $530 million in “illiquid positions.”  Most of these “illiquid positions” 
were, in fact, U.S.-microcap stocks purchased and traded by the Absolute funds primarily 
through HWM. 

As HWM’s primary trader, Ahn, executed numerous trades that manipulated 
upwards the price of the microcap stocks.  Ahn received the Absolute funds’ trade orders 
from Heatherington, who received his instructions from Homm.  Ahn would often 
communicate with Heatherington via an online instant messaging system in which they 
openly discussed trade orders.  The instant messages also reveal Ficeto’s knowledge and 
oversight of the scheme.  Some of the methods Heatherington, Homm, Ficeto and Ahn 
used to accomplish the price manipulation included matched orders between the various 
Absolute funds, marking the close in shares of several of the microcap companies, and 
wash trades between accounts held in the names of the same individual funds.  Many of 
these transactions were executed at the end of the day, and very often the end of the month, 
for the apparent purpose of marking the close to positively impact the Absolute funds’ net 
asset values (“NAVs”), thereby engaging in “portfolio pumping,” or materially overstating 
the hedge funds’ performance and NAVs before the end of the month.  At times, trades 
were back-dated to the previous month-end, also with the apparent purpose of portfolio 
pumping. Homm, Ficeto, and Heatherington made millions of dollars through these 
manipulative trades as well as transaction fees paid to HWM. 

1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding. 

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Respondent 

1. Ahn was a registered representative from August 2005 to May 2008 
associated with HWM, a now defunct broker-dealer that had been registered with the 
Commission during the relevant period.  Ahn was HWM’s primary trader during the 
relevant period.  Ahn, 36 years old, is a resident of Fullerton, California. 

Other Relevant Individuals and Entities 

2. HWM is a California corporation formerly based in Beverly Hills, 
California.  During the relevant period, HWM conducted both a brokerage and investment 
banking business.  HWM was registered as a broker-dealer with the Commission from 
March 1996 through November 30, 2009, when HWM’s Form BDW, withdrawing its 
registration with the Commission as a broker-dealer, became effective.    

3. Ficeto was the co-owner of HWM during the relevant period, during which 
time Ficeto was also a director of the firm as well as a registered representative, trader, 
branch manager and general securities principal.   

4. Homm was the co-owner and a director of HWM during the relevant period.  
Homm was also the co-founder, the original chief investment officer and later the co-chief 
investment officer of ACMH.       

5. Heatherington was an ACMH trader and the employee in charge of back 
office operations during most of the relevant period.    

6. ACMH was organized under the laws of the Cayman Islands.  It was quoted 
on the London Alternative Investment Market and was registered with the Commission as 
an investment adviser until September 10, 2007.  During the relevant period, ACMH 
managed the Absolute funds, which were formerly domiciled in the Cayman Islands but 
have subsequently either been liquidated or are now managed by a different fund 
management company.  ACMH has no securities registered under the Exchange Act.    

Background 

7. During the relevant period, HWM, Homm, Ficeto, Heatherington and Ahn 
manipulated upward the prices of a number of thinly-traded microcap stocks or 
artificially maintained their prices, including some of those which HWM helped bring 
public, in return for placement fees and warrants and shares of stock.   

8. Generally, after the Absolute funds invested in a company through a private 
placement, HWM orchestrated a reverse merger to bring the companies public by merging 
the entity with a publicly traded shell company.  Following the reverse merger, the 

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companies prepared a Form SB-2 registration statement to register for re-sale the shares 
held by HWM in its name, by Heatherington’s company, and, in some cases, by the 
Absolute funds.  Following the registration statement going effective, the Absolute funds 
began selling their shares, mostly through matched orders placed between their HWM 
accounts, in order to walk the stock price upwards or to maintain an artificially high price.  
Many of the matched orders also set the closing prices for the stocks.  Additionally, HWM 
made purchases on behalf of the Absolute funds in the market to mark the close in the stock 
of a number of the issuers.  For some of the companies’ stock, nearly all of the trading 
volume during the relevant period resulted from trades executed through HWM.  Typically, 
the manipulative trading began with the Absolute funds trading among each other at low 
prices. After the stock price had been artificially inflated, Ficeto, Homm and 
Heatherington would then sell their shares to the Absolute funds, reaping millions of 
dollars of profit as a result.  

9. Homm, Ficeto, Heatherington and Ahn used a number of different 
manipulative techniques to artificially inflate the microcap issuers’ stock price, including 
the use of matched orders, marking the close, wash sales and purchases at increasing 
prices. As HWM’s primary trader, Ahn, following the instructions of Ficeto and 
Heatherington, executed nearly all of these manipulative trades.  Ahn also communicated 
with the Absolute funds’ point of contact, Heatherington, using an instant messaging 
system the text of which HWM failed to retain.  The instant messages reveal multiple 
examples of Heatherington stating the price at which he wanted a stock to close the day, 
discussions regarding the best way to achieve those prices, and back-dating trades so that 
the trades would fall on the last day of the month, and thus be included for a particular 
fund’s quarter-end performance.  One discussion between Ahn and Heatherington 
concerned selecting the best day to back-date a certain trade, so as to make it less 
suspicious because the trade’s predetermined price was significantly away from the 
market on the actual day it was executed. 

Manipulation of the Prices of Numerous Microcap Stocks 

10. The most frequent methods by which the issuers’ stock prices were 
manipulated were through purchases of the stocks at increasing, artificial prices and 
numerous matched orders, mostly executed between Absolute funds’ accounts held at 
HWM, as well as trades between the Absolute funds and accounts held in HWM’s name 
and accounts owned or controlled by Ficeto and Heatherington.    

11. An example of the price manipulation accomplished through matched 
orders occurred in shares of ProElite, Inc. (“ProElite”), a microcap issuer that HWM and 
Ficeto helped to bring public in May 2007.  HWM (in its own name), Ficeto, 
Heatherington, and the Absolute funds owned considerable stakes in ProElite, which HWM 
itself, Ficeto, and Heatherington had obtained at discounted prices or as part of HWM’s 
underwriting compensation.   

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12. On at least twenty-one days during the period September 2006 through 
September 2007, HWM marked the close in ProElite stock through matched orders either 
between accounts held at HWM or between accounts held at HWM and another broker, 
including at least three wash sales.  On most of these days, there were no other reported 
trades in ProElite stock other than matched orders in which HWM executed both sides of 
the trade or matched orders in which HWM was involved as a broker on one side of the 
trade. 

13. In January 2007, ProElite filed a Form SB-2 resale registration statement, 
effective May 14, 2007, for the sale of almost all of the shares held by HWM in its name, 
by Ficeto as custodian for his two minor children, over half of the shares held by 
Heatherington’s company and some of the shares held by the Absolute funds. 

14. On May 15, 2007, following the effective date of the Form SB-2, HWM, 
through Ahn, executed a series of cross trades (a) in three separate trades between different 
Absolute funds at $3.25 a share, (b) among an Absolute fund and HWM and 
Heatherington’s company at $8.00 a share, and (c) among an Absolute fund and the 
custodial accounts of Ficeto’s children at $12.00 a share.  Ahn, at the instruction of Ficeto 
and/or Heatherington, entered the cross trades within minutes of each other, all after the 
close of the market.  There were no significant announcements by the company that day or 
any other reason that would explain the increase in price.  Further, there were no other 
reported trades in ProElite stock that day other than those executed by HWM.   

15. As a result of the manipulation of ProElite’s stock price, HWM made 
significant profits.  Specifically, HWM sold $14.2 million worth of ProElite shares to the 
Absolute funds, as well as an additional $2.8 million to the Hunter Fund, an investment 
fund managed by Ficeto whose sole investors were three of the Absolute funds.  Ficeto 
individually and on behalf of his children sold $2.4 million to the Absolute funds, and 
Heatherington sold $8.7 million to the Absolute funds.  Additionally, HWM made $1.1 
million in sales credits, which HWM considered to be the equivalent of commissions.   

16. During the relevant period, HWM, Ficeto, Heatherington and Ahn 
manipulated the price of at least five other microcap issuers through matched orders.  As a 
result of that manipulative activity, HWM sold nearly $15.4 million worth of stock to the 
Absolute funds at artificially high prices, and made nearly $4 million in sales credits.  
Ficeto individually and on behalf of his children sold an additional $1.7 million worth of 
stock to the Absolute funds, and Heatherington sold $2.9 million in stock to the Absolute 
funds as well. 

17. HWM, Ficeto, Heatherington, and Ahn also marked the close in a number 
of the same microcap issuers’ stock.  Marking the close is the practice of executing 
purchase or sale orders at or near the close of the market with the intent to affect its closing 
price. For example, at the end of 14 of the 15 months between January 2006 and March 
2007, HWM, Ficeto, Heatherington, and Ahn successfully marked the close in MicroMed 

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Cardiovascular. Similar marking the close trades were executed through HWM in the 
stock of at least five other microcap issuers on over fifty occasions. 

18. Ahn, at the instruction of Ficeto and/or Heatherington, executed nearly all 
of the manipulative trades. Most of the matched orders and desired closing prices were 
placed by Heatherington, either by telephone or through e-mail and instant messages, 
including through HWM’s archived e-mail system, as well as an alternate instant 
messaging system that HWM or Ficeto purposely did not retain.  While Ahn did not 
properly retain either the originals or copies of all of the instant messages, he did retain 
copies of a number of them in his personal files.   

19. HWM, Ficeto, Heatherington and Ahn also executed a number of trades 
between two accounts held by the same fund, thus effecting at least four wash sales.  As 
with the other matched orders, the apparent purpose of those transactions was to 
manipulate the price of the issuers’ stock and/or to generate massive sales credits to HWM.  
Specifically, on June 18, 2007, the Absolute East West Fund Limited sold 500,001 shares 
of ProElite from one of its HWM accounts to another.  On June 26, 2007, the Absolute 
Activist Value Fund sold 250,000 shares of ProElite from one of its HWM accounts to 
another. On September 13, 2007, the Absolute Octane Fund Limited sold 4.5 million 
shares of Quest Group to another of its HWM accounts, and sold 2.5 million shares of 
ProElite to another of its HWM accounts.  As a result of these trades, the firm made 
$615,000 in sales credits. Two of the wash sales in ProElite constituted all of the trades on 
those days, and therefore effectively set the stock’s price.  Similarly, the wash trade in 
Quest Group stock artificially inflated its stock price as well.   

20. HWM, Ficeto, Heatherington and Ahn also back-dated a number of trades.  
As detailed in certain instant messages, Heatherington asked Ahn to revise the trade date of 
certain transactions to reflect a date that was prior to month’s end.  For example, on 
September 4, 2007, Heatherington asked Ahn if a matched trade for 400,000 shares of 
ProElite traded among three of the ACMH funds could be back-dated to the previous 
Friday, the last trading day of the month.  Ahn responded that he would need to call Ficeto 
to obtain approval. Ficeto approved the trade which was entered with an “as of” date of 
August 31, 2007. 

21. In a July 30, 2007 instant message exchange between Heatherington and 
Ahn, Heatherington proposed a matched trade at such a high price for the day that Ahn 
responded that it would “be a red flag to print [i.e., be reported] a lot above the high of the 
day.”   Apparently to avoid raising the red flag triggered by Heatherington’s proposed 
price, Ahn suggested back-dating the trade to the prior week, but noted that he would need 
to obtain Ficeto’s approval before so doing.  With Ficeto’s approval, Ahn entered the trade 
as of July 23, 2007, when the stock was trading closer to Heatherington’s initial proposed 
price. 

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Ahn Aided and Abetted HWM’s Failure to Preserve Instant Messaging Transcripts

 22. HWM is required to maintain originals or copies of all communications that 
relate to its business, including instant-messaging transcripts, for a period of three years.  
As detailed above, HWM failed to maintain originals or copies of the instant messages sent 
via the alternate instant message system.  By knowingly failing to maintain originals or 
copies of the instant messages in accordance with the requirements of Section 17(a) of the 
Exchange Act and Rule 17a-4(b)(4), Ahn willfully aided and abetted and caused HWM’s 
failure to maintain a record of those instant messages.  

Violations 

23. As a result of the conduct described above, Ahn willfully violated Section 
10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in 
connection with the purchase or sale of securities. 

24. As a result of the conduct described above, Ahn willfully aided and abetted 
and caused HWM’s violations of Section 15(c)(1) of the Exchange Act, which prohibits 
brokers and dealers from using manipulative, deceptive, or other fraudulent devices or 
contrivances in connection with securities transactions.   

25. As a result of the conduct described above, Ahn willfully aided and abetted 
and caused HWM’s violations of Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) 
thereunder, which requires brokers and dealers to retain originals of all communications 
received and copies of all communications sent relating to its business as such. 

Undertakings

 Respondent undertakes to: 

26. In connection with this public administrative proceeding and any related 
judicial or administrative proceedings or investigation commenced by the Commission or 
to which the Commission is a party, Ahn: (i) agrees to appear and be interviewed by 
Commission staff at such times and places as the staff requests upon reasonable notice; (ii) 
will accept service by mail or facsimile transmission of notices or subpoenas issued by the 
Commission for documents or testimony at depositions, hearings, or trials, or in connection 
with any related investigation by Commission staff; (iii) with respect to such notices and 
subpoenas, waive the territorial limits on service contained in Rule 45 of the Federal Rules 
of Civil Procedure and any applicable local rules, provided that the party requesting the 
testimony reimburses Respondent’s travel, lodging and subsistence expenses at the then-
prevailing U.S. Government per diem rates; and (iv) consent to personal jurisdiction over 
him in any United States District Court or administrative court for the purposes of 
enforcing any such subpoena. 

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In determining whether to accept Ahn’s Offer, the Commission has considered 
Ahn’s undertaking to cooperate as enumerated in Section III.26 above. 

IV. 

In view of the foregoing, the Commission deems it appropriate, in the public 
interest, to impose the sanctions agreed to in Respondent Ahn’s Offer. 

Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act, it is hereby 
ORDERED that: 

A. Respondent Ahn cease and desist from committing or causing any violations 
and any future violations of Sections 10(b), 15(c)(1) and 17(a) of the Exchange Act and 
Rules 10b-5 and 17a-4(b)(4) thereunder.  

B. Respondent Ahn be, and hereby is barred from association with any broker 
and dealer with the right to reapply for association after five (5) years to the appropriate self-
regulatory organization, or if there is none, to the Commission. 

C. Any reapplication for association by the Respondent will be subject to the 
applicable laws and regulations governing the reentry process, and reentry may be 
conditioned upon a number of factors, including, but not limited to, the satisfaction of any 
or all of the following:  (a) any disgorgement ordered against the Respondent, whether or 
not the Commission has fully or partially waived payment of such disgorgement; (b) any 
arbitration award related to the conduct that served as the basis for the Commission order; 
(c) any self-regulatory organization arbitration award to a customer, whether or not related 
to the conduct that served as the basis for the Commission order; and (d) any restitution 
order by a self-regulatory organization, whether or not related to the conduct that served as 
the basis for the Commission order. 

D. Respondent shall pay a civil money penalty in the amount of Forty 
Thousand Dollars ($40,000) to the United States Treasury.  Payment shall be made in the 
following four installments: (a) Ten Thousand Dollars ($10,000) to be paid within twenty-
one days of the entry of this Order; (b) Ten Thousand Dollars ($10,000) to be paid within 
six (6) months of the entry of this Order; (c) Ten Thousand Dollars ($10,000) to be paid 
within nine (9) months of the entry of this Order; and (d) a final payment of Ten Thousand 
Dollars ($10,000) to be paid within one year of the entry of this Order.  If any payment is 
not made by the date the payment is required by this Order, the entire outstanding balance 
of civil penalties, plus any additional interest accrued pursuant to 31 U.S.C. 3717, shall be 
due and payable immediately, without further application.  Payments shall be: (A) made by 
wire transfer, United States postal money order, certified check, bank cashier's check or 
bank money order; (B) made payable to the Securities and Exchange Commission; (C) 
hand-delivered or mailed to the Office of Financial Management, Securities and Exchange 
Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 

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22312; and (D) submitted under cover letter that identifies Tony Ahn as a Respondent in 
these proceedings, the file number of these proceedings, a copy of which cover letter and 
money order or check shall be sent to Michele Layne, Associate Regional Director, 5670 
Wilshire Boulevard, 11th Floor, Los Angeles, California 90036.   

E. Respondent acknowledges that the Commission is not imposing a civil 
penalty in excess of Forty Thousand Dollars ($40,000) based upon his agreement to 
cooperate in a Commission investigation and/or related enforcement action.  If at any time 
following the entry of the Order, the Division of Enforcement (“Division”) obtains 
information indicating that Respondent knowingly provided materially false or misleading 
information or materials to the Commission or in a related proceeding, the Division may, at 
its sole discretion and without prior notice to the Respondent, petition the Commission to 
reopen this matter and seek an order directing that the Respondent pay an additional civil 
penalty. Respondent may not, by way of defense to any resulting administrative 
proceeding: (1) contest the findings in the Order; or (2) assert any defense to liability or 
remedy, including, but not limited to, any statute of limitations defense.    

 By the Commission.

       Elizabeth  M.  Murphy
       Secretary  

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Service List 

Rule 141 of the Commission's Rules of Practice provides that the Secretary, or 
another duly authorized officer of the Commission, shall serve a copy of the Order 
Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) 
and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing 
Remedial Sanctions and a Cease-and-Desist Order ("Order"), on the Respondent and his 
legal agent. 

The attached Order has been sent to the following parties and other persons entitled 
to notice: 

Honorable Brenda P. Murray 
Chief Administrative Law Judge 
Securities and Exchange Commission 
100 F Street, N.E 
Washington, DC 20549-2557 

Lucee S. Kirka, Esq.  
Los Angeles Regional Office 
Securities and Exchange Commission 
5670 Wilshire Boulevard, 11th Floor 
Los Angeles, CA 90036 

Mr. Tony Ahn 
c/o Edward S. Gelfand, Esq.  
Gartenberg Gelfand Wasson & Selden LLP  
801 S. Figueroa Street, Suite 2170  
Los Angeles, CA  90017 

Edward S. Gelfand, Esq.  
Gartenberg Gelfand Wasson & Selden LLP  
801 S. Figueroa Street, Suite 2170  
Los Angeles, CA  90017 
(Counsel for Tony Ahn) 

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