Corruption: Hedge fund avoids jail time – pleads guilty of fraud
(Bloomberg) The co-founder of Premium Point Investments and a former trader pleaded guilty to charges they overstated asset values at the now-defunct hedge fund, but they won’t serve any time behind bars.
Anilesh Ahuja, the fund’s co-founder, and trader Jeremy Shor were found guilty of conspiring to overvalue the hedge fund’s assets by more than $100 million and sentenced to prison in 2019.
However, U.S. District Judge Katherine Polk Failla in Manhattan overturned their convictions in December due to errors and misleading statements by prosecutors.
The pair had faced a new trial but reached a deal with the government allowing them to plead guilty to a single securities fraud count.
Under the deal, which was approved by Failla in a hearing on Friday, the two men won’t serve any prison time, pay a fine or serve probation.
Let’s talk about it.
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Hedge Fund gets away with prison time and fees
hedge fund pledges guilty and gets away with prison time
Before their convictions were overturned, Ahuja was sentenced to more than four years in prison and Shor, almost 3.5.
But their surrender dates were delayed, initially due to the Covid pandemic and later because the judge was considering throwing out the verdict.
As a result, neither man served any part of his sentence.
“We are pleased that Mr. Ahuja can finally put this ordeal behind him without having to spend a day in jail,” his lawyers, Richard Tarlowe and Roberto Finzi, said in a statement.
“After years of litigation, we are pleased to put this matter behind us with no additional punishment beyond the punishment already inflicted by the process,” Shor’s lawyer, Justin Weddle, said in an email.
Federal prosecutor Daniel Gitner defended the deal before the judge on Friday, saying Ahuja and Shor had already made “substantial restitution” to investors.
“Today’s guilty pleas to securities fraud bring to a close the defendants’ scheme to mismark their funds’ books,” U.S. Attorney Damian Williams said in a statement.
“This office stands by this prosecution, and is pleased that this matter has resolved with the defendants’ acceptance of responsibility.”
“Unacceptable errors”
Hedge fund avoids jail time after being sentences to prison – hedge fund pledges guilty
“I tried my hardest to conduct a fair trial,” Failla said in overturning the verdict.
“I no longer have confidence in the fairness of the trial.”
She declined to dismiss the charges against Ahuja and Shor though, saying that the errors made by the government — while “unacceptable” — were not severe enough to warrant throwing out the case.
Ahuja was a senior mortgage bond trader at Lehman Brothers, RBS Greenwich Capital and Deutsche Bank AG for four years before co-founding Premium Point in 2008.
The firm initially focused on the U.S. residential loan market and began amassing bonds backed by distressed assets in the wake of the global financial crisis.
It later expanded into the jumbo loan and home rental businesses and managed about $2 billion of assets at its peak.
Premium Point began winding down in late 2016 after posting large losses.
The fund revealed the following year that federal securities regulators were examining the way it valued its assets.
Its mortgage credit funds filed for bankruptcy protection in March 2018, and Ahuja, Majidi and Shor were charged two months later.
Former Chief Risk Officer Ashish Dole also pleaded guilty and testified for the prosecution at the trial.
The case is U.S. v. Ahuja, 18-cr-00328, U.S. District Court, Southern District of New York (Manhattan), via Bloomberg.
Should hedge funds be allowed to get away with fraud?
It’s curious how these hedge fund co-founders were sentenced to prison but managed to get away with jail time.
What does this tell us about our system?
Why do you think this happened?
Was the government paid out?
I’m interested to know what you think; leave a comment below.
#Occupywallstreet – Organized crime in Wall Street
It’s no secret Wall Street is known for its predatorial strategies in the finance world.
Retail investors known as the ‘little guys’ have been screaming at our government to take action for decades now.
Words do not fall on deaf ears.
They know all too well what’s going on within our financial system.
See, they’re lobbied to play a role in it.
Welcome to Franknez.com – for decades activists have peacefully raised awareness of the corruption in Wall Street. But will this new generation let themselves be silenced without any change?
The SEC released a market transparency report that highlights proposals that could protect retail investors from market manipulation.
In short, the SEC would be micro-managing short selling activities.
This type of monitoring is believed to refrain hedge funds from naked short selling.
If the proposals are enforced, it will be a massive victory for the retail community.
However, retail investors are skeptical of the SEC enforcing anything at all.
Actions speak louder than words and retail investors have not seen any changes in the markets for over a year since the ‘meme stock’ frenzy.
Market makers and brokers colluded last year to remove the buy button when AMC and GameStop began to soar in January.
The manipulation sparked a movement.
And in my opinion, will start a revolution if suppression on these heavily shorted stocks isn’t lifted.
90% of retail investors now own AMC Entertainment stock according to CEO Adam Aron.
So how is the price trading so low?
Naked short selling is the issue.
The question is, will regulators take action now or when it’s too late?
Who’s responsible and how did this get out of hand?
Big banks and financial institutions with money buy influence.
They buy the influence of the media and policy/lawmakers.
The term in the United States is referred to as lobbying.
In Mexico they call the act of bribing politicians in power corruption.
There are many parties involved of which none have served jail time nor been held with accountability.
How could they when bail is so easy for these massive institutions to pay anyway?
Lobbying usually comes in the form of ‘donations’, either to a party or institution.
SEC Commission Hester Pierce who voted no on market transparency belonged to an anti-regulatory party that compensated her outside of her career’s salary.
We see this corruption everywhere.
Gary Gensler himself is worth more than $100 million according to Bloomberg sources.
