U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20278 / September 13, 2007
SEC v. Robert A. Berlacher, Lancaster Investment Partners, L.P., Northwood Capital Partners, L.P., Cabernet Partners, L.P., Chardonnay Partners, L.P., Insignia Partners, L.P., VFT Special Ventures, Ltd., LIP Advisors, LLC, NCP Advisors, LLC, and RAB Investment Company, LLC, Civil Action No. 07-cv-3800 (ER)
SEC Files Fraud Charges Against Hedge Fund Manager Robert A. Berlacher and the Lancaster Hedge Funds for Engaging in Illegal "Pipe" Trading Scheme and Insider Trading
The Securities and Exchange Commission filed securities fraud and related charges today against Robert A. Berlacher, Lancaster Investment Partners, L.P., Northwood Capital Partners, L.P., Cabernet Partners, L.P., Chardonnay Partners, L.P., Insignia Partners, L.P., VFT Special Ventures, Ltd., LIP Advisors, LLC, NCP Advisors, LLC, and RAB Investment Company, LLC (collectively, "Lancaster") in the U.S. District Court for the Eastern District of Pennsylvania. The Commission's complaint alleges that the defendants collectively perpetrated an illegal trading scheme to evade the registration requirements of the federal securities laws in connection with at least ten unregistered securities offerings, which are commonly referred to as "PIPEs" (Private Investments in Public Equities), made materially false representations to the PIPE issuers in connection with those offerings, and engaged in illegal insider trading.
The Commission's complaint alleges that, during the period 2000 through 2005, Berlacher implemented an unlawful trading scheme that enabled Lancaster to improperly realize more than $1.7 million in ill-gotten gains by investing in PIPE offerings without incurring market risk. Specifically, the complaint alleges:
By engaging in the foregoing conduct, the complaint alleges that defendants violated the registration provisions of the Securities Act (Sections 5(a), 5(b), and 5(c)) and the antifraud provisions of both the Securities Act (Section 17(a)) and the Securities Exchange Act of 1934 (Section 10(b) and Rule 10b-5 thereunder). The Commission's complaint seeks to permanently enjoin defendants from future violations of the applicable provisions of the federal securities laws, disgorgement of ill-gotten gains (with prejudgment interest thereon), and civil penalties.
The Commission's investigation is continuing.