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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20317 / October 1, 2007

SEC v. Mark R. Conway, et al., 05-CV-12209-RWZ (D. Mass.)

Final Judgment Entered Against Massachusetts Hedge Fund Manager

The Securities and Exchange Commission announced today that, on September 27, 2007, the federal district court in Massachusetts entered a Final Judgment by consent against Mark R. Conway, formerly of Waltham, Massachusetts, in a securities fraud case filed in 2005. The Final Judgment permanently enjoins Conway from violating Sections 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 Final Judgment does not impose disgorgement or civil penalty obligations against Conway based upon his criminal conviction and obligation to pay restitution in a parallel criminal case. Conway consented, without admitting or denying the allegations, to the entry of the Final Judgment.

On November 4, 2005, the Commission filed an enforcement action and obtained emergency relief (including an asset freeze) against Conway and his firm, Groundswell Partners LLC. The Commission's Complaint alleged that Conway defrauded his clients by not disclosing the millions of dollars in losses incurred by Groundswell Capital LP, a hedge fund managed by Conway and his firm, the actual amount of assets in the fund and the trading strategy he was employing.

Previously, the Commission received default judgments against Groundswell Partners and Groundswell Capital, which was named as a relief defendant. On May 7, 2007, Conway was sentenced to seven years in prison and was ordered to pay restitution in the amount of $20 million based upon his guilty plea to criminal charges brought by the United States Attorney's Office concerning conduct similar to that in the Commission's Complaint.

The Commission acknowledges the assistance of the U.S. Attorney's Office for the District of Massachusetts and the Boston office of the Federal Bureau of Investigation.

For further information, please see Litigation Release Nos. 19460 (November 9, 2005), 19473 (November 22, 2005), 19773 (July 26, 2006), 19807 (August 17, 2006) and 20145 (June 6, 2007).

 

http://www.sec.gov/litigation/litreleases/2007/lr20317.htm

Modified: 10/01/2007