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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22505 / October 4, 2012

Securities and Exchange Commission v. Lion Capital Management, LLC and Hausmann-Alain Banet, Civil Action No. CV 12-05116-EJD (N.D. Cal., filed October 3, 2012)

SEC CHARGES SAN FRANCISCO INVESTMENT ADVISER AND ITS OWNER FOR FRAUD

The Securities and Exchange Commission brought fraud charges against San Francisco-based hedge fund manager Hausmann-Alain Banet and his firm Lion Capital Management. According to the SEC’s complaint, Banet stole more than a half-million dollars from a retired schoolteacher who thought she was investing her retirement savings in Banet’s hedge fund.

According to the SEC’s complaint filed against Banet and Lion Capital Management in federal court in San Francisco, Banet led the teacher to believe that his hedge fund would invest in the stock market using a long/short equity investing strategy. Instead, Banet brazenly took the teacher’s investment totaling $550,000 and used it to pay unauthorized personal and business expenses, including his home mortgage, office rent, and staff salaries. Banet also provided phony account statements showing non-existent investment gains and listing an independent administrator that performed no actual work for the fund.

As a result of the conduct described in the Complaint the SEC alleges that Lion Capital and Banet violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Advisers Act and Rule 206(4)-8 thereunder. The SEC seeks permanent injunctions, disgorgement including prejudgment interest, and civil penalties from Lion Capital and Banet.

In a parallel action, the U.S. Attorney’s Office for the Northern District of California announced criminal charges against Banet. The SEC acknowledges the assistance and cooperation of the U.S. Attorney’s Office, Federal Bureau of Investigation (FBI), and Immigration and Customs Enforcement (ICE), and Financial Industry Regulatory Authority (FINRA).

The SEC’s investigation was conducted by Sahil Desai and Robert Leach of the Asset Management Unit in the San Francisco Regional Office. John Yun is leading the SEC’s litigation.

 

http://www.sec.gov/litigation/litreleases/2012/lr22505.htm


Modified: 10/04/2012