U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19399 / September 29, 2005
Securities and Exchange Commission v. K.L. Group, LLC, et al., Case No. 05-80186-CIV-RYSKAMP (S.D.Fla.)
ORDER OF DEFAULT JUDGMENT OF PERMANENT INJUNCTION AND OTHER RELIEF ENTERED AGAINST DEFENDANTS WON SOK LEE AND YUNG BAE KIM
The Securities and Exchange Commission ("SEC") announced that on August 15, 2005, the United States District Court for the Southern District of Florida entered an Order of Default Judgment of Permanent Injunction and Other Relief ("Default Judgment") against Defendants Won Sok Lee ("Lee") and Yung Bae Kim ("Kim"). The Default Judgment enjoins Lee and Kim from violations of 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 Section 206(1) and 206(2) of the Investment Advisers Act of 1940. Additionally, the Default Judgment provides for disgorgement and the imposition of civil penalties in amounts to be determined by the Court upon the SEC's motion.
The SEC commenced this action by filing its complaint on March 2, 2005, against various hedge funds, investment advisers and the hedge funds and investment advisers' principals, Lee and Kim, among others. The complaint alleged that from approximately 1999 to March 2005, the Defendants raised at least $81 million from investors nationwide by boasting annualized returns of 125 to 150% over the last several years and by sending false account statements to investors showing similar gains. According to the complaint, the hedge funds were suffering tremendous trading losses and only about $11 million remained of the more than $81 million that investors put into the hedge funds.
The complaint charged the Defendants with 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. The complaint further charged the Advisers with violations of Section 206(1) and (2) of the Investment Advisers Act of 1940 and charged Defendants Lee and Kim with aiding and abetting violations of Section 206(1) and 206(2) of the Advisers Act.
For additional information, see Litigation Release No. 19117 (March 3, 2005).