U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19473 / November 22, 2005
Securities and Exchange Commission v. Mark R. Conway and Groundswell Partners LLC, Civil Action No. 05-12209-RWZ (D.Mass. filed November 4, 2005).
COURT ENTERS PRELININARY INJUNCTION AND ASSET FREEZE AGAINST MASSACHUSETTS HEDGE FUND MANAGER
The Securities and Exchange Commission announced today that on November 10, 2005, the United States District Court for the District of Massachusetts entered a preliminary injunction order against hedge fund manager Mark R. Conway ("Conway") and his firm, Groundswell Partners LLC ("Groundswell Partners"), both of Waltham, Massachusetts, in connection with a fraud action filed by the Commission on November 4, 2005. The Court's preliminary injunction prohibits 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 Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Court also continued the relief it granted in its entry of a temporary restraining order and asset freeze on November 4, 2005. Among other things, the Court's order: (i) freezes certain of the defendant's assets, as well as the assets in Groundswell Capital LP (the "Fund), the defendant's hedge fund, which was named as a relief defendant; (ii) requires the defendants to provide a detailed accounting of their assets and transactions; and (iii) provides the Commission with expedited discovery. In entering the asset freeze order, the Court excluded certain assets that Conway could use for certain expenses.
The Commission's Complaint alleges that Conway defrauded his clients by not disclosing the millions of dollars in losses that the Fund incurred, the actual amount of assets in the Fund and the trading strategy he was employing. In addition, the Complaint alleges that Conway altered documents to cover-up his misrepresentations.
For more information see [SEC v. Mark R. Conway and Groundswell Partners LLC, Civil Action No. 05-12209-RWZ, USDC, D.Mass.] (LR-19460, November 9, 2005).