SEC Announces $38 Million Fair Fund Distribution in the Veras Hedge Funds Settlement
FOR IMMEDIATE RELEASE
Washington, D.C., March 21, 2007 - The Securities and Exchange Commission today announced the distribution of approximately $38 million in Fair Funds to approximately 810 mutual funds that were victims of fraudulent market timing and late trading by the Veras hedge funds. The funds distributed reflect the entirety of the disgorgement and civil penalties paid by the Veras hedge funds and their principals to settle charges of unlawful market timing and late trading brought by the SEC.
The Sarbanes-Oxley Act of 2002 gave the SEC authority to increase the amount of money returned to harmed investors by allowing civil penalties to be included in Fair Fund distributions. Prior to SOX, only disgorgement could be returned to harmed investors. To date, the SEC has distributed over $1 billion in Fair Funds.
Linda Chatman Thomsen, Director of the Division of Enforcement, said, "Today's distribution marks another significant step in the Commission's vigorous program to return money to investors injured by mutual fund trading abuses."
On Dec. 22, 2005, the SEC brought settled administrative proceedings against the Veras Capital Master Fund, VEY Partners Master Fund, Veras Investment Partners, LLC, Kevin D. Larson, and James R. McBride for their participation in a fraudulent market timing and late trading scheme. Respondents consented to entry of the settlement order without admitting or denying the SEC's findings. The settlement order found that from January 2002 through September 2003, respondents used deceptive techniques to continue market timing in mutual funds that previously had detected and restricted, or that otherwise would not have permitted, the Veras hedge funds' trading. The settlement order also found that respondents traded mutual fund shares after 4:00 pm Eastern Time and received the same day's price, and that, by virtue of their conduct, respondents caused violations of and willfully violated and aided and abetted violations of the antifraud and mutual fund pricing provisions of the federal securities laws.
The settlement order provided for distribution of the Fair Fund directly to the mutual funds affected by Veras' misconduct. The settlement funds are being distributed by the U.S. Treasury directly to the affected mutual funds pursuant to the distribution plan approved by the SEC on Oct. 4, 2006.
The plan administrator responsible for distributing the settlement funds is Peter J. Henning, Esq., Wayne State University Law School, 471 W. Palmer, Detroit, MI 48202. Questions regarding the distribution may be directed to Mr. Henning at (313) 577-3906.
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For further information contact:
Robert J. Burson
Senior Associate Regional Director, Midwest Regional Office