Ex-Durus hedge fund manager gets probation, fine
Mon Mar 6, 2006pm ET
NEW YORK, March 6 (Reuters) - A Connecticut hedge fund manager who pleaded guilty to helping his former firm file false regulatory statements was sentenced to one year's probation and a $10,000 fine, U.S. prosecutors said on Monday.
In federal court in Bridgeport, Connecticut, U.S. District Court judge Alan Nevas sentenced J. Douglas Schmidt for his role in helping his firm understate its holdings in several health-care companies while he was chief operating officer at Durus Capital Management LLC, authorities said.
He has since left the firm.
Schmidt admitted that in early 2003, he helped Durus understate its holdings in Aksys Ltd. (AKSY.O: Quote, Profile, Research), Allos Therapeutics (ALTH.O: Quote, Profile, Research) and Esperion Therapeutics Inc. in filings with the U.S. Securities and Exchange Commission.
By mid-2003, Durus amended its statements, saying in SEC filings that it had "inadvertently" acquired about 33 percent of Esperion, now part of Pfizer Inc. (PFE.N: Quote, Profile, Research), and nearly 80 percent of Aksys, prosecutors said.
Investment funds are required to file SEC statements when they acquire 5 percent or more of a public company.
"It is our hope that this prosecution will send a message to hedge fund operators that the federal government is watching," U.S. Attorney Kevin O'Connor of the District of Connecticut said in a statement.
Previously, Schmidt agreed to disgorge $110,000 and pay a $65,000 fine to settle civil charges brought by the SEC.
Last December, former Durus owner Scott Sacane pleaded guilty to one count of violating federal securities laws in connection with events at Durus. He is scheduled to be sentenced on June 28. |
