New York federal court orders hedge fund manager to pay civil penalty
The US Commodity Futures Trading Commission has obtained a USD200,000 civil penalty and a permanent commodities trading ban against hedge fund manager and commodity pool operator Linuxor Asset Management and its principal Abbas A Shah, both based in New York.
The consent order of permanent injunction, entered on 17 December 2008 by US district judge Lewis A Kaplan of the Southern District of New York, stems from a complaint filed by the CFTC on 19 September 2005.
The complaint charges Shah and Linuxor with defrauding fund participants in the Linuxor Global Macro Fund. Shah managed the hedge fund, served as its principal, and acted as its trading adviser.
The order finds that Shah and Linuxor committed fraud by misrepresenting the value of the Linuxor Global Macro Fund.
In one instance, Shah sent an email that materially misrepresented the net asset value of the fund by approximately USD4m, and another email falsely claimed success in recovering prior substantial losses.
The order also finds that the defendants failed to send to fund participants the required quarterly statements for 2002 to 2004 and a timely annual report for 2002.
The defendants also commingled participants' funds with the property of others, in violation of CFTC regulations.
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