SEC Charges Hedge Fund Manager Peter Eichler, Jr. With Fraud Steering Winning Trades To Select Clients

SEC v. Aletheia Research and Management, Inc. and Peter J. Eichler, Jr., Case No. 12-cv-10692-JFW (RZx) (C.D. Cal.).  On December 14, 2012, the SEC announced charges against Hedge Fund Manager Peter Eichler and his firm Aletheia Research and Management, Inc.  The SEC alleges Eichler his firm unfairly allocated losing trades to the accounts of two hedge funds managed by the firm, resulting in financial losses for investors.  At the same time, they allocated winning trades to accounts owned by Eichler and firm employees as well as accounts belonging to certain clients.  The SEC alleges that by improperly allocating trades, Aletheia and Eichler violated the fiduciary duties they owed to their advisory clients.  Also, Aletheia failed to implement policies that could have prevented the cherry-picking scheme from occurring.  In addition, the SEC alleges that the firm breached its fiduciary duties when it did not disclose financial difficulties to clients until just before filing for bankruptcy.  The SEC has charged Aletheia with violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder, and Sections 204, 204A, 206(1), 206(2), 206(4), and 207 of the Investment Advisers Act and Rules 204-1(a)(2), 204A-1(a), 206(4)-7(a), and 206(4)-8(a) thereunder.  The SEC charged Eichler with violating Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder, and Sections 206(1), 206(2), and 206(4) of the Advisers Act and Rule 206(4)-8(a) thereunder. The SEC seeks injunctive relief , disgorgement plus pre-judgment interest, and civil monetary penalties.

This entry was posted in Securities and tagged , , , , . Bookmark the permalink.