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U.S. Securities and Exchange Commission

K.L. Group, LLC, et al.

On March 3, 2005, the SEC obtained a temporary restraining order and asset freeze against a number of defendants involved in an ongoing hedge fund fraud. The defendants included three related hedge fund investment advisers, multiple hedge funds, a registered broker-dealer, and the principals that controlled these entities. The SECís complaint alleged that from approximately 1999 to the time the SEC filed its complaint, the defendants raised at least $81 million from investors nationwide by claiming annual returns of 125 to 150% and by sending false account statements to investors showing similar gains. According to the complaint, the hedge funds were actually suffering tremendous losses. For more information about the SECís action, you can read Litigation Release No. 19117.

On March 25, 2005, the Court entered a preliminary injunction against all defendants. The Court also appointed Guy A. Lewis, Esq., as Receiver over the defendants.

For the latest information about the Receivership, please visit the Receiverís website.

http://www.sec.gov/divisions/enforce/claims/klgroup.htm


Modified: 5/5/2005