U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 19303 / July 14, 2005
SECURITIES AND EXCHANGE COMMISSION v. JON E. HANKINS, ET AL.,
Civil Action No. 05CV5808 (KMW) (S.D.N.Y.)
COURT ENTERS PRELIMINARY INJUNCTION AGAINST JON E. HANKINS, TENET ASSET MANAGEMENT, LLC, AND TENET CAPITAL PARTNERS CONVERTIBLE OPPORTUNITIES FUND, LP.
The Securities and Exchange Commission announced that on July 13, 2005, the United States District Court for the Southern District of New York, entered a preliminary injunction order on consent ("Order") against Tenet Capital Partners Convertible Opportunities Fund, LP ("Convertible Opportunities Fund"), a hedge fund, its investment adviser, Tenet Asset Management, LLC ("Tenet") and Tenet's principal, Jon E. Hankins ("Hankins") (collectively, the "Defendants"). Pending a final disposition of the Commission's enforcement action, the Order enjoins the Defendants from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Tenet and Hankins from violating Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.
The Commission's complaint, filed on June 22, 2005, alleged that the Convertible Opportunities Fund, Tenet, and Hankins concealed from investors large investment losses and were seeking to unfairly honor a redemption request at inflated values to cover up the fraud. In particular, the complaint alleged that Hankins and Tenet recently made numerous false statements to investors of the Convertible Opportunities Fund, as well as to investors in another hedge fund managed by Tenet and Hankins, Tenet Offshore Capital Partners Ltd.
On June 22, 2005, the Court granted, among other emergency relief, the appointment of a temporary receiver over the Convertible Opportunities Fund and Tenet. In its enforcement action, the Commission is seeking additional relief, including orders permanently enjoining the Defendants from committing future violations of the foregoing federal securities laws, and a final judgment ordering the Defendants to disgorge ill-gotten gains, and assessing civil penalties.
PERSONS TO CONTACT:
Helene Glotzer, Associate Regional Director, 212-336-0078
Gerald Gross, Assistant Regional Director, 212-336-0085
Scott Black, Senior Trial Counsel, 212-336-0029