SEC says hedge fund hid losses from investors | VailDaily.com
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SEC says hedge fund hid losses from investors

WASHINGTON – Managers of Global Crown Capital LLC concealed double-digit trading losses from investors in a hedge fund they advised, according to proceedings brought Thursday by the Securities and Exchange Commission.San Francisco-based Global Crown sent misleading account statements to Cogent Capital Management hedge fund investors that falsely inflated the fund’s performance, the SEC alleged. Cogent, begun in 2003, quickly experienced trading losses in excess of 20 percent, but fund managers Rani Jarkas and Antoine Chaya, both of San Francisco, concealed that from investors, according to the SEC.It claims the two padded Cogent’s books with a $200,000 “reserve,” yet didn’t put any actual cash into the fund, and included the reserve in calculating quarterly returns on investors’ capital. The SEC claims hedge fund investors’ account statements understated actual trading losses by as much as 90 percent.The SEC said its proceedings will be brought for a hearing by an administrative law judge to determine whether remedial actions are appropriate.Kathleen Bisaccia, an assistant district administrator in the SEC’s San Francisco office, said although Jarkas and Chaya eventually funded the reserve, it kept investors in the dark about the matter. She said the investors are entitled to know “exactly what is happening with their money,” rather than get “spin” from the adviser.The hedge fund has about 70 clients and $30 million of assets under management, according to the SEC.An attorney for Jarkas and Chaya couldn’t be reached immediately for comment.Vail, Colorado


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