Litigation Release No. 17315 / January 15, 2002
SEC v. BURTON G. FRIEDLANDER, FRIEDLANDER INTERNATIONAL LIMITED, FRIEDLANDER MANAGEMENT LIMITED, FRIEDLANDER CAPITAL MANAGEMENT, FRIEDLANDER LIMITED PARTNERSHIP, AND OPAL INTERNATIONAL FUND, Civil Action No. 01 Civ. 4683 (S.D.N.Y.)
SEC OBTAINS PRELIMINARY INJUNCTION AND APPOINTMENT OF A RECEIVER IN CASE CHARGING HEDGE FUND AND ITS MANAGER WITH "PORTFOLIO PUMPING" AND OTHER FRAUD
The Commission announced today that it has obtained a preliminary injunction against Burton G. Friedlander, 62, and four related entities, in a case involving "portfolio pumping" and other securities fraud pending in the United States District Court for the Southern District of New York. In a hearing in December, Judge Kimba M. Wood also granted the Commission's request for the appointment of a receiver for the related entities, Friedlander International Limited, Friedlander Management Limited, Friedlander Limited Partnership, and Friedlander Capital Management Corporation. Judge Wood appointed Andrew Irving of the New York City firm Robinson, Silverman, Pearce, Aronsohn & Berman as the receiver for those entities. Friedlander, a securities trader, is a resident of Greenwich, Connecticut. The defendants have filed a notice of appeal of Judge Wood's decision.
The Commission filed its complaint in May of this year, alleging fraud in connection with Friedlander's management of the assets of Friedlander International Limited, an overseas hedge fund. The Commission contended that Friedlander inflated the Hedge Fund's net asset value by improperly and arbitrarily valuing certain unlisted securities of a company in which Friedlander and entities he controlled had heavily invested. The Commission's complaint also alleged that, between at least August 2000 and December 2000, Friedlander engaged in purchases of a thinly traded common stock as part of a manipulative scheme to inflate the value of that stock and to inflate the Hedge Fund's net asset value. SEC Litigation Release No. 17021 (June 1, 2001)
In granting the preliminary injunction, Judge Wood determined that Friedlander had disregarded a court-ordered process for obtaining input from the investors and had attempted to withdraw money from a Hedge Fund account despite a prior commitment not to do so without obtaining a court order. Judge Wood cited Friedlander's past conduct, the danger of wasting investor assets, and the need to determine the hedge fund's activities as the bases for ordering the preliminary injunction. Judge Wood also found that a receiver should be in place because the costs of a receiver were outweighed by the likelihood of future harm to the investors.
In addition to the relief granted, the Commission seeks permanent injunctive relief against Friedlander and the other defendants, accountings, disgorgement of ill-gotten gains, civil monetary penalties, and other relief. See also, SEC Litigation Release No. 17021 (June 1, 2001)