SEC Charges Former CFO of New York-Based Hedge Fund With Securities Fraud
FOR IMMEDIATE RELEASE
Washington, D.C., Nov. 10, 2009 — The Securities and Exchange Commission today charged the former chief financial officer of a New York-based hedge fund with securities fraud for arranging secret sales of securities from his personal trading account to the hedge fund accounts at inflated prices to generate his own illicit profits.
According to the SEC's complaint, filed in U.S. District Court for the Southern District of New York, Ezra C. Levy's job responsibilities at investment advisory firm Boston Provident LP required that he have access to the firm's electronic trade entry system. He did not, however, have the authority to make trading decisions for Boston Provident's accounts, and was merely authorized to execute the trading decisions of the firm's chief executive officer. The SEC alleges that Levy made unauthorized, fraudulent trades that resulted in financial losses to the hedge fund accounts while he made a personal profit of more than a half-million dollars. The SEC is seeking a court order to freeze Levy's assets.
"Levy executed a fraudulent scheme to benefit himself at the expense of Boston Provident and its clients," said Andrew Calamari, Associate Director of the SEC's New York Regional Office. "Levy clearly violated the trust placed in him by putting his own selfish priorities ahead of investors and the securities laws."
The SEC alleges that on two days in June 2009, Levy secretly entered "sell" orders for securities at above-market prices for his personal account. At approximately the same time, he entered "buy" orders for Boston Provident's accounts, for the same securities at the same above-market prices. By placing these matched orders, Levy caused sales of securities from his personal account to Boston Provident's accounts at inflated prices. Levy's profit from these fraudulent trades exceeded $537,000.
The SEC's complaint alleges that Levy violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC acknowledges the assistance and cooperation of the U.S. Attorney's Office for the Southern District of New York.
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For more information about this enforcement action, contact:
Andrew M. Calamari
Associate Director, SEC's New York Regional Office
Alison T. Conn
Assistant Director, SEC's New York Regional Office