SEC v. Berton Hochfeld et al., Case No. 12-cv-8202 (S.D.N.Y.). On November 26, 2012, the SEC announced it obtained a consent judgment in its case against Berton M. Hochfeld and Hochfeld Capital Management, L.L.C., ordering injunctions, asset freezes, the appointment of a receiver, and other preliminary relief. The SEC brought its emergency action seeking an asset freeze on November 9. According to the SEC, Hochfeld misappropriated about $1.3 million from the Heppelwhite Fund, a hedge fund with $6 million in assets. He used the money for personal expenses including purchasing antiques. Hochfeld and Hochfeld Capital made false statements to investors by furnishing them with statements that overstated the value of their investments, and by failing to disclose that Hochfeld is subject to an SEC Order that bars him from associating with any broker, dealer, or investment adviser. Without admitting or denying the SEC’s allegations, Hochfeld and Hochfeld Capital consented to the Court’s judgments which: (i) permanently enjoin them from violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, Section 17(a) of the Securities Act, and Sections 203 and 206 of the Investment Advisers Act of 1940; (ii) order them to provide a full accounting of all assets currently under their control; (iii) order an asset freeze as to Hochfeld, Hochfeld Capital, and the Heppelwhite Fund; (iv) order Hochfeld and Hochfeld Capital to disgorge ill-gotten gains and pay civil penalties in amounts to be determined; and (v) order the appointment a receiver over the Heppelwhite Fund and Hochfeld Capital. Additionally, the U.S. Attorney’s Office for the Southern District of New York charged Hochfeld with securities fraud and wire fraud in a parallel criminal action.
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