UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17630 / July 24, 2002
Securities and Exchange Commission v. Michael L. Smirlock and LASER Advisers, Inc., 00Civ.9680 (RO)(S.D.N.Y.)
HEDGE FUND ADVISER SETTLES SEC CIVIL ACTION
The Securities and Exchange Commission announced today that it has settled its civil action against Michael L. Smirlock, the Chairman, majority shareholder and former President and CEO of LASER Advisers, Inc., an investment adviser. In its complaint in this action, the SEC alleged, among other things, that from December 1997 to June 1998, Smirlock engaged in an unlawful scheme to falsely inflate the value of an investment portfolio that he managed for three hedge funds, and that certain investors in the hedge funds purchased interests while Smirlock conducted the scheme. The complaint also alleged that by engaging in this conduct Smirlock, a recidivist, violated a prior Commission cease-and-desist order which, among other things, prohibited Smirlock from violating the antifraud and recordkeeping provisions of the Investment Advisers Act of 1940. See, SEC v. Michael L. Smirlock and LASER Advisers, Inc., Litigation Release No. 16838 (December 21, 2000).
Simultaneous with the filing of the Commission's complaint, the United States Attorney for the Southern District of New York filed criminal charges against Smirlock arising from the same conduct charged in the Commission's complaint. Smirlock pleaded guilty recently to two counts of securities fraud and was sentenced to four years incarceration and ordered to pay $12.6 million in restitution. See, SEC v. Michael L. Smirlock and LASER Advisers, Inc., Litigation Release No. 17536 (May 28, 2002).
Without admitting or denying the allegations against him, Smirlock has settled the SEC civil action by agreeing to the entry of a final judgment that permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, causing, aiding or abetting violations of Sections 206(1), 206(2) and 204 of the Investment Advisers Act of 1940 and Rules 204-2(a)(16) and 204-2(e)(3) thereunder, and violating the prior Commission Order. Smirlock has also agreed to settle administrative proceedings under Section 203(f) of the Investment Advisers Act of 1940, to be instituted after the entry of the injunction, in which the Commission orders that Smirlock be permanently barred from association with any investment adviser.
LASER Advisers also settled the Commission charges today. Without admitting or denying the allegations against it, LASER Advisers has agreed to the entry of a final judgment that permanently enjoins the firm from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1), 206(2) and 204 of the Investment Advisers Act of 1940 and Rules 204-2(a)(16) and 204-2(e)(3) thereunder.