Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: maceng2 who wrote (203365)	11/7/2002 10:09:55 PM
From: ild	Read Replies (1) \| Respond to of 436258

Beacon Hill's Woes Grow As SEC Files a Complaint By GREG ZUCKERMAN Staff Reporter of THE WALL STREET JOURNAL The Securities and Exchange Commission filed a civil-fraud complaint against hedge fund Beacon Hill Asset Management, several weeks after the firm shocked investors with losses topping 50%. The action is the first indication that the losses revealed late last month could have been due to more than volatile moves in the bond market, as executives of the firm have told their investors. While the SEC's action was directed against the hedge fund, an SEC official indicated that executives of Beacon Hill, Summit, N.J., also may face their own investigations, as the agency's probe continues. "We are investigating what happened and the role of the individuals involved," said Brian Ochs, assistant director of the SEC's Division of Enforcement. "We are in the early stages of the investigation." A spokesman for Beacon Hill said only: "Beacon Hill has agreed to effect an orderly transition of the funds to a new investment manager pursuant to an agreement with the SEC." The complaint filed in the U.S. District Court in Manhattan alleges that at least during the period from July through September, Beacon Hill reported net asset values and returns to its investors "that it knew or should have known were materially overstated." In part due to the SEC's investigation, directors of Beacon Hill stripped the hedge fund Wednesday of about $400 million of remaining investments. The funds, leveraged to represent about $1.3 billion in bonds and related investments, will be managed by Ellington Management, Greenwich, Conn., another large bond hedge fund. The SEC said that in September Beacon Hill executives told the firm's prime broker, Bear Stearns Cos., that the hedge funds were valued at $756 million. But on Oct. 1, Bear Stearns presented its own calculation of the value of the funds, and it only added up to $256.9 million. Court approval will be required for an investor to withdraw money from the Beacon Hill funds. The SEC is in the midst of examining the entire hedge-fund industry, which has seen a rush of new investments in the past year. SEC officials say the Beacon Hill charges don't result from the agency's ongoing look into hedge funds, which are lightly regulated investment vehicles that cater to wealthy investors. "We've always had jurisdiction to investigate possible fraud in hedge funds even though [hedge funds] are not regulated," said Mr. Ochs. Beacon Hill has blamed unprecedented turbulence in the mortgage-backed bond market for the heavy losses. But some investors in the fund say they are unclear why the losses were so sudden, given that the bond market has been volatile throughout the year, and the losses were only revealed recently