U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21471 / April 1, 2010
Securities and Exchange Commission v. Stephen C. Bond, Civil Action No. 10-1358 HRL (N.D.Cal. March 31, 2010)
SEC Charges Bay Area Man for Posing as Portfolio Manager in Multi-Million Dollar Hedge Fund Fraud
The Securities and Exchange Commission sued a Bay Area man for posing as a "fund manager" in a bogus hedge fund scheme.
The SEC alleges that Stephen C. Bond of Walnut Creek, Calif., aided the scheme of Silicon Valley hedge fund manager Albert K. Hu from 2001 through 2008 while helping himself to nearly a million dollars. The SEC sued Hu in March 2009. That case remains pending.
The SEC's complaint alleges that Bond attended investor meetings along with Hu to solicit investments in the "Asenqua" and "Fireside" hedge funds. According to the SEC, Bond was portrayed at these meetings and in written materials as the funds' portfolio manager. Bond's introduction was designed to reassure investors about the security and the legitimacy of the funds.
According to the SEC's complaint, Bond's apparent knowledge about the securities markets and role as the investment manager was significant to investors, who decided to invest after meeting with Hu and Bond and receiving documents describing Bond's involvement in the investment decisions of the funds. The SEC alleges that, in reality, Bond conducted no actual securities trading for the funds and never executed the complex trading strategies that he and Hu explained to investors. The SEC's complaint alleges that Bond personally received approximately $900,000 in the investment scheme for his role in helping Hu defraud investors.
The Commission's complaint, filed in federal district court for the Northern District of California, charges Bond with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Additionally, the SEC's complaint charges Bond with aiding and abetting violations of Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The SEC seeks a final judgment permanently enjoining Bond from future violations of the antifraud provisions of the federal securities laws and ordering him to pay financial penalties and disgorgement of ill-gotten gains.
Meanwhile, the SEC's previously-filed action against Hu is proceeding, and he remains in custody following the filing of a related criminal action by the United States Attorney's Office for the Northern District of California.
See Also: SEC Complaint