UNITED STATES SECURTIES AND EXCHANGE COMMISSION
Litigation Release No. 17536 / May 28, 2002
United States v. Michael L. Smirlock, Criminal No. 00CR1292 (GEL) (S.D.N.Y. May 24, 2002)
Securities and Exchange Commission v. Michael L. Smirlock and LASER Advisers, Inc., 00Civ.9680 (RO) (S.D. N.Y.)
MICHAEL L. SMIRLOCK, FORMER HEDGE FUND MANAGER, SENTENCED TO FOUR YEARS AND ORDERED TO PAY $12.6 MILLION IN RESTITUTION FOR DEFRAUDING INVESTORS
Recidivist Smirlock Was Subject To A Prior SEC Order and Sanction
On May 24, 2002, Michael L. Smirlock, the former President and CEO of LASER Advisers, Inc., a Short Hills, New Jersey investment adviser firm, was sentenced to four years incarceration and ordered to pay $12.6 million in restitution to investors in three hedge funds managed by Smirlock. Judge Gerard E. Lynch of the Federal District Court for the Southern District of New York imposed the sentence.
Smirlock had pled guilty to two counts of securities fraud for engaging in a complex scheme that falsely inflated the value of an investment portfolio that Smirlock managed for the three hedge funds. Simultaneous with Smirlock's criminal indictment, the SEC filed a civil enforcement action against Smirlock and LASER Advisers, Inc. The Commission charged, among other things, that Smirlock and LASER Advisers, Inc. engaged in securities fraud by inflating the values reported for certain thinly traded securities known as swaptions. The Commission also charged Smirlock with violating a prior Commission order described below. See, SEC v. Michael L. Smirlock and LASER Advisers, Inc., Litigation Release No. 16838 (December 21, 2000). The SEC action against Smirlock, which was stayed pending resolution of the criminal matter, remains pending.
In 1993, Smirlock was the subject of a prior SEC enforcement action. In that settled administrative proceeding, the Commission ordered Smirlock to cease and desist from committing or causing any future violations of the antifraud and record keeping provisions of the Investment Advisers Act of 1940. In its 1993 order, the SEC, among other things, suspended Smirlock from the securities industry for three months and ordered him to pay a $50,000 penalty. See In the Matter of Michael L. Smirlock, Advisers Act Release No. 1393 (November 29, 1993).
Smirlock's recidivism and violation of the Commission's prior order were matters considered by Judge Lynch in imposing Smirlock's sentence.