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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20376 / November 30, 2007

SEC v. Daniel N. Jones and Azure Bay Management, LLC, Case No. 07-CV-1198 (W.D. Mich.)

SEC Obtains Emergency Relief Against Investment Adviser Firm and Its Owner For Fraud

The Securities and Exchange Commission ("Commission") announced that on November 29, 2007, it filed a civil action in the U.S. District Court for the Western District of Michigan charging Daniel N. Jones and Azure Bay Management, LLC ("Azure Bay") with fraudulent conduct.

The Commission's complaint alleges that Jones, a resident of Battle Creek, Michigan, and Azure Bay, his unregistered investment adviser, defrauded their private hedge fund client, The Addington Fund LP ("Addington" or the "Fund"). According to the complaint,

  • Jones, portfolio manager and President of Addington, hid from Addington substantial losses which occurred sometime in 2005.
  • For nearly two years, Jones prepared and disseminated false statements and performance reports for Addington's investors.
  • Jones hid the true performance of the Fund. Instead of having a value of $2.1 million, as Jones told investors, the Fund only has approximately $200,000 remaining.
  • Despite these losses, the Fund's general partner, Azure Bay, through Jones, continued to take excessive fees of at least $135,000 based on the Fund's false performance.

In an order dated November 29, 2007, the Honorable Judge Robert James Jonker entered a temporary restraining order against Jones and Azure Bay from violating antifraud provision of the Securities Act of 1933 [Section 17(a)] and the Investment Advisers Act of 1940 [Sections 206(1) and (2)]. The order, among other things, also freezes assets of Jones, Azure Bay, and Addington until further order of the court.

The Commission wishes to thank the Federal Bureau of Investigation in Kalamazoo, Michigan for its assistance in this matter.

SEC Complaint in this matter

 

http://www.sec.gov/litigation/litreleases/2007/lr20376.htm

Modified: 11/30/2007