Litigation Release No. 19423 / October 12, 2005

United States of America v. Edward Thomas Jung, (U.S.D.C., Northern District of Illinois, Eastern Division, Criminal Action No. 03-CR-172)


The United States Securities and Exchange Commission announced that on September 12, 2005, the Honorable Milton I. Shadur, Senior United States District Judge for the Northern District of Illinois, entered an order that sentenced Edward Thomas Jung of Chicago, Illinois to 109 months in prison and ordered him to pay $21 million in restitution for defrauding investors in a hedge fund. According to the indictment against him, from 1994 to 1998, Jung was the sole manager of a hedge fund known as the Strategic Income Fund, L.L.C., and also controlling general partner of ETJ Partners, Ltd., a broker-dealer through which Jung traded stock options on the Chicago Board Options Exchange. The indictment alleged that Jung falsely represented his trading performance to prospective investors in the hedge fund, and that after investing, Jung misappropriated the investors' assets to collateralize his own securities trading unrelated to the fund, and to pay for ETJ Partners' expenses. The indictment charged that Jung's fraudulent activities caused 55 investors to lose more than $21 million.

In June of 2001, the Securities and Exchange Commission filed a civil complaint against Jung and ETJ Partners in connection with the scheme described above, charging Jung and ETJ Partners with violating the antifraud provisions of the federal securities laws. On March 14, 2002, the United States District Court for the Northern District of Illinois entered a final judgment order against Jung and ETJ Partners, pursuant to their consent, which enjoined Jung and ETJ Partners from further violations of the antifraud provisions of the federal securities laws. On March 28, 2002, the Commission entered an order in an administrative proceeding filed against Jung and ETJ Partners which barred Jung from association with any broker or dealer or investment adviser and which revoked ETJ Partners registration with the Commission as a broker-dealer.

For further information, see Litigation Releases 18570 (February 9, 2004), 17995 (February 25, 2003), 17417 (March 15, 2002), 17041 (June 20, 2001), and Matter of Edward Thomas Jung and E. Thomas Jung Partners, Ltd., d/b/a ETJ Partners, Ltd., 77 SEC Docket 656 (March 28, 2002).