U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19637 / April 3, 2006
SEC v. Jon E. Hankins, et al., Civil Action No. 05CV5808 (KMW) (S.D.N.Y.)
SEC Settles Injunctive Action Alleging Fraud Against Jon E. Hankins, Tenet Asset Management, LLC, and Tenet Capital Partners Convertible Opportunities Fund, LP
The Securities and Exchange Commission (Commission) announced that it settled an injunctive action brought against a hedge fund, Tenet Capital Partners Convertible Opportunities Fund, LP (Fund), its investment adviser, Tenet Asset Management, LLC (Tenet) and Tenet's principal, Jon E. Hankins (Hankins) (collectively, the Defendants). The Commission's complaint alleged that between February and June 2005, Hankins fraudulently concealed losses from the Fund's investors by altering the Fund's audited financial statements and by making materially false and misleading statements to the Fund's investors about its asset values and performance. The Defendants neither admit nor deny the allegations of the complaint.
Pursuant to the settlement, the United States District Court for the Southern District of New York entered a final judgment order (the Final Judgment) permanently enjoining all 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 promulgated thereunder, and permanently enjoining Defendants Hankins and Tenet from violating Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Final Judgment also orders Hankins liable for $256,597 in disgorgement of ill-gotten gains and prejudgment interest, as well as $130,000 in civil penalties.