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Alternative Market Briefing

Father and son hedge fund managers fined $4.8m over false statements

Monday, April 23, 2012

Bailey McCann, Opalesque New York: A Boston-based hedge fund manager and his son will pay $4.8 million to settle with the Securities and Exchange Commission (SEC) over making false statements about the fund’s performance. According to the SEC, Gabriel Bitran founded GMB Capital Management in 2005 with his son Marco Bitran and raised more than $500m over a three year period making false claims about their investment strategy and its performance.

The false statements included false performance records daring from 1998 that showed annualized returns of as much as 16.2% with no down years. The told investors that the performance was based on optimal-pricing models when they were actually best on hypothetical historical investments, according to an administrative order filed by the SEC today.

Customers were told that their money would be invested using a unique quantitative strategy when in reality both men were investing in other hedge funds. Those funds included the Petters Group fraud scheme and Bernie Madoff’s Ponzi scheme. Investors suffered significant losses from these investments that they were unaware of, the regulator says.

Both men settled the fine without admitting or denying any wrong doing. Bloomberg reports that Nicholas Theodoru the attorney for Gabriel Bitran said that their clients were happy to settle with th......................

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