SEC v. Jason Konior, Absolute Fund Advisors, LLC, and Absolute Fund Management, LLC, Case No. 1:12-cv-04145-LLS (S.D.N.Y.).  On May 24, 2012, the SEC obtained a preliminary injunction, asset freeze, and an order for a verified accounting against Jason Konior and his affiliated funds.  Since November 2011, Konior and the funds obtained $11 million through the sale of interests in the Absolute Fund which Konior claimed had $220 million in trading capital.  Konior claimed the fund would provide millions of dollars in matching funds and establish a “first loss” trading program that would allow the hedge fund investors to increase their potential profits.  For at least some investors, the loss trading program was never created.  Instead, Konior took $2 million to pay redemptions from earlier investors, to pay Konior, and to pay other improper personal and business expenses.  When investors demanded return of their capital the assets were only a small fraction of the amount needed to repay investors.

Konior and the funds are charged with violations of Section 10(b) of the Securities Exchange Act and Rules 10b-5(a), (b), and (c) thereunder.  The SEC is seeking civil monetary penalties, disgorgement, and injunctive relief in addition to the emergency relief obtained.