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To: long-gone who wrote (24000)	12/8/1998 2:01:00 PM
From: Alex	Read Replies (1) \| Respond to of 116815

Report: U.S. Regulator Probing LTCM Disclosures <Picture> NEW YORK (Reuters) - The Securities and Exchange Commission is probing whether Long-Term Capital Management disclosed the extent of its trouble while raising cash before its bail-out this summer, the Wall Street Journal said Tuesday, but the fund said it was unaware of any SEC probe and that it complied fully with the law. The giant hedge fund, run by former Salomon Brothers bond trading whiz John Meriwether, suffered punishing losses during recent global market upheaval and was rescued for $3.6 billion by a group of 14 leading banks. Investors say the fund did not disclose that while it was telling potential investors it could reverse its misfortune if it only had more cash, it increasingly used cash to meet margin calls, the paper reported, citing sources close to the matter. Margin calls are demands by brokerages for more money in an account to cover market trades. But a spokesman for the fund said LTCM was ''unaware of any SEC probe,"" adding in a written statement: ''LTCM is confident that its disclosure documents and supplements in connection with all investors at all times were in full compliance with all applicable laws, rules and regulations."" LTCM said all fund-raising efforts in August or September 1998 were done on a private placement basis and were limited to a fairly small group of highly sophisticated investors, most of whom were already investors in the fund. The offering materials used were an updated version of standard offering materials which had been used in prior offerings, LTCM said in a statement. At the time, it was acknowledged that the offering materials would be further supplemented through the closing date to take account of the latest developments and investors would need time to consider any supplemental materials before making a decision to invest, LTCM said. But these fund-raising efforts were superseded by events that led to the formation of the consortium of banks that ultimately came up with the rescue package to save LTCM from near-collapse, the fund said. ''As a result, no closing date for these prospective investors was ever established and no sales of securities were ever consummated,"" an LTCM spokesman said. ''The need for supplemental disclosure was therefore obviated."" An SEC spokesman said the agency does not confirm or deny the existence of inquiries, the paper said. Last month, on the heels of LTCM"s woes, SEC regulators reportedly began studying how well-equipped Wall Street firms are to deal with risks inherent in lending to hedge funds, or investment funds that often trade with borrowed money. ((-- New York newsroom, 212 859-1700)