Press Release: SEC Announces $38 Million Fair Fund Distribution in the Veras Hedge Funds Settlement
The SEC distributed $38 million to 810 mutual funds after Veras hedge funds and their principals—Kevin D. Larson and James R. McBride—settled charges of fraudulent market timing and late trading from 2002 to 2003, using deceptive methods to bypass trading restrictions and exploit after-hours pricing, with all disgorgement and penalties directed to harmed investors under the Sarbanes-Oxley Act.
Between January 2002 and September 2003, Veras Capital Master Fund, VEY Partners Master Fund, Veras Investment Partners, LLC, Kevin D. Larson, and James R. McBride engaged in fraudulent market timing and late trading by executing after-hours trades to obtain unfair pricing advantages and circumventing mutual fund trading restrictions. On December 22, 2005, they settled SEC charges without admitting or denying wrongdoing, agreeing to pay disgorgement and civil penalties totaling $38 million. Under the Sarbanes-Oxley Act, civil penalties were included in the Fair Fund distribution, and the U.S. Treasury, administered by Peter J. Henning, distributed the full amount directly to the 810 affected mutual funds pursuant to an SEC-approved plan dated October 4, 2006.
Between January 2002 and September 2003, the Veras hedge funds—Veras Capital Master Fund, VEY Partners Master Fund, and Veras Investment Partners, LLC—along with their principals Kevin D. Larson and James R. McBride, engaged in a fraudulent scheme involving market timing and late trading of mutual fund shares. They used deceptive techniques to bypass restrictions imposed by mutual funds that had previously detected or would have blocked their trading, and executed trades after 4:00 p.m. Eastern Time to receive the same day’s closing price, gaining unfair advantages in violation of federal antifraud and pricing provisions. On December 22, 2005, the respondents settled SEC administrative proceedings without admitting or denying the allegations, agreeing to disgorge ill-gotten gains and pay civil penalties. Under the Sarbanes-Oxley Act of 2002, civil penalties could be included in Fair Fund distributions, allowing the full $38 million to be returned to harmed investors rather than being forfeited to the government. The SEC approved a distribution plan on October 4, 2006, directing the U.S. Treasury to distribute the funds directly to the 810 affected mutual funds, with Peter J. Henning, Esq., serving as the court-appointed administrator. This marked one of many significant Fair Fund distributions by the SEC, which by 2007 had returned over $1 billion to injured investors. The action underscored the Commission’s commitment to holding market abusers accountable and ensuring restitution to victims of mutual fund trading abuses.
Exhibits & Attached Documents (2)
Extracted insights
- $1.00B $1 billion ≥$1B
- $38.00M $38 Million $10M–$100M
- $38.00M $38 million $10M–$100M
- person linda chatman thomsen
- person peter j. henning
- agency sec to increase the amount of money returned to harmed investors
- agency Securities and Exchange Commission
- person veras hedge funds
- SEC Announce $38 Million Fair Fund Distribution
- SEC Distribute $38 million in Fair Funds to approximately 810 mutual funds
- Veras hedge funds Cause Violations Antifraud and mutual fund pricing provisions of the federal securities laws
- SEC Bring Settled Administrative Proceedings Veras Capital Master Fund, VEY Partners Master Fund, Veras Investment Partners, LLC, Kevin D. Larson, and James R. McBride
- Veras hedge funds Engage in Fraudulent market timing and late trading scheme
- SEC Settle Charges Unlawful market timing and late trading
- Sarbanes-Oxley Act of 2002 Give Authority SEC to increase the amount of money returned to harmed investors
- SEC Distribute Over $1 billion in Fair Funds
- Linda Chatman Thomsen Say Today's distribution marks another significant step in the Commission's vigorous program to return money to investors injured by mutual fund trading abuses
- U.S. Treasury Distribute Settlement funds directly to the affected mutual funds
- Peter J. Henning Be Responsible Distributing the settlement funds
SEC Announces $38 Million Fair Fund Distribution in the Veras Hedge Funds Settlement FOR IMMEDIATE RELEASE 2007-50 Washington, D.C., March 21, 2007 - The Securities and Exchange Commission today announced the distribution of approximately $38 million in Fair Funds to approximately 810 mutual funds that were victims of fraudulent market timing and late trading by the Veras hedge funds. The funds distributed reflect the entirety of the disgorgement and civil penalties paid by the Veras hedge funds and their principals to settle charges of unlawful market timing and late trading brought by the SEC. The Sarbanes-Oxley Act of 2002 gave the SEC authority to increase the amount of money returned to harmed investors by allowing civil penalties to be included in Fair Fund distributions. Prior to SOX, only disgorgement could be returned to harmed investors. To date, the SEC has distributed over $1 billion in Fair Funds. Linda Chatman Thomsen, Director of the Division of Enforcement, said, "Today's distribution marks another significant step in the Commission's vigorous program to return money to investors injured by mutual fund trading abuses." On Dec. 22, 2005, the SEC brought settled administrative proceedings against the Veras Capital Master Fund, VEY Partners Master Fund, Veras Investment Partners, LLC, Kevin D. Larson, and James R. McBride for their participation in a fraudulent market timing and late trading scheme. Respondents consented to entry of the settlement order without admitting or denying the SEC's findings. The settlement order found that from January 2002 through September 2003, respondents used deceptive techniques to continue market timing in mutual funds that previously had detected and restricted, or that otherwise would not have permitted, the Veras hedge funds' trading. The settlement order also found that respondents traded mutual fund shares after 4:00 pm Eastern Time and received the same day's price, and that, by virtue of their conduct, respondents caused violations of and willfully violated and aided and abetted violations of the antifraud and mutual fund pricing provisions of the federal securities laws. The settlement order provided for distribution of the Fair Fund directly to the mutual funds affected by Veras' misconduct. The settlement funds are being distributed by the U.S. Treasury directly to the affected mutual funds pursuant to the distribution plan approved by the SEC on Oct. 4, 2006. The plan administrator responsible for distributing the settlement funds is Peter J. Henning, Esq., Wayne State University Law School, 471 W. Palmer, Detroit, MI 48202. Questions regarding the distribution may be directed to Mr. Henning at (313) 577-3906. # # # For further information contact: Robert J. Burson Senior Associate Regional Director, Midwest Regional Office (312) 353-7428 Distribution Plan: http://www.sec.gov/litigation/admin/2006/34-54299-pdp.pdf Settlement Order: http://www.sec.gov/litigation/admin/33-8646.pdf http://www.sec.gov/news/press/2007/2007-50.htm Home | Previous Page Modified: 03/21/2007
SEC Announces $38 Million Fair Fund Distribution in the Veras Hedge Funds Settlement FOR IMMEDIATE RELEASE 2007-50 Washington, D.C., March 21, 2007 - The Securities and Exchange Commission today announced the distribution of approximately $38 million in Fair Funds to approximately 810 mutual funds that were victims of fraudulent market timing and late trading by the Veras hedge funds. The funds distributed reflect the entirety of the disgorgement and civil penalties paid by the Veras hedge funds and their principals to settle charges of unlawful market timing and late trading brought by the SEC. The Sarbanes-Oxley Act of 2002 gave the SEC authority to increase the amount of money returned to harmed investors by allowing civil penalties to be included in Fair Fund distributions. Prior to SOX, only disgorgement could be returned to harmed investors. To date, the SEC has distributed over $1 billion in Fair Funds. Linda Chatman Thomsen, Director of the Division of Enforcement, said, "Today's distribution marks another significant step in the Commission's vigorous program to return money to investors injured by mutual fund trading abuses." On Dec. 22, 2005, the SEC brought settled administrative proceedings against the Veras Capital Master Fund, VEY Partners Master Fund, Veras Investment Partners, LLC, Kevin D. Larson, and James R. McBride for their participation in a fraudulent market timing and late trading scheme. Respondents consented to entry of the settlement order without admitting or denying the SEC's findings. The settlement order found that from January 2002 through September 2003, respondents used deceptive techniques to continue market timing in mutual funds that previously had detected and restricted, or that otherwise would not have permitted, the Veras hedge funds' trading. The settlement order also found that respondents traded mutual fund shares after 4:00 pm Eastern Time and received the same day's price, and that, by virtue of their conduct, respondents caused violations of and willfully violated and aided and abetted violations of the antifraud and mutual fund pricing provisions of the federal securities laws. The settlement order provided for distribution of the Fair Fund directly to the mutual funds affected by Veras' misconduct. The settlement funds are being distributed by the U.S. Treasury directly to the affected mutual funds pursuant to the distribution plan approved by the SEC on Oct. 4, 2006. The plan administrator responsible for distributing the settlement funds is Peter J. Henning, Esq., Wayne State University Law School, 471 W. Palmer, Detroit, MI 48202. Questions regarding the distribution may be directed to Mr. Henning at (313) 577-3906. # # # For further information contact: Robert J. Burson Senior Associate Regional Director, Midwest Regional Office (312) 353-7428 Distribution Plan: http://www.sec.gov/litigation/admin/2006/34-54299-pdp.pdf Settlement Order: http://www.sec.gov/litigation/admin/33-8646.pdf http://www.sec.gov/news/press/2007/2007-50.htm Home | Previous Page Modified: 03/21/2007