Whether an attorney, an accountant, or other business professional, this fraud settlement shows that the SEC is holding not only perpetrators responsible for a fraud scheme but also those that enable them.
Hedge fund COO makes admissions in SEC settlement
July 28, 2014. This post first appeared in the California Legal Malpractice blog
- Ensure that the lender (Harbinger Capital Partners Special Situations Fund) had separate counsel.
- Ensure that the loan was consistent with fiduciary obligations to the Special Situations Fund.
- Ensure that the owner paid an “above market” interest rate on the loan.
- Timely disclose the loan to investors.
- Take actions to cause the lender to accelerate the owners payment on the loan once investors in the Special Situations Fund were permitted to begin redeeming their investments.
The SEC stated “This settlement shows that we hold accountable not only those who perpetrate a scheme, but also those who enable them.”