Sun, Aug 2, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

SEC accuses Commonwealth Advisors and founder of concealing $32m hedge fund losses from investors

Friday, November 09, 2012

amb
Walter A. Morales
Benedicte Gravrand, Opalesque Geneva - The U.S. Securities and Exchange Commission (SEC) charged a hedge fund manager with defrauding investors by hiding millions of dollars in losses suffered during the financial crisis from investments tied to residential mortgage-backed securities (RMBS).

This lawsuit reportedly follows a four-year long investigation.

Walter A. Morales and his firm Commonwealth Advisors Inc., located in Baton Rouge, LA, allegedly bought the lowest and riskiest tranches of a collateralized debt obligation (CDO) called Collybus. According to the SEC, Morales sold MBSs into the CDO at prices he had obtained four months earlier, while knowing that the RMBS market had declined precipitously in the meantime. As the CDO investments continued to perform poorly, Morales and his firm conducted a series of manipulative trades between the hedge funds they advised (called cross-trades) in order to conceal a $32m loss experienced by one of the funds in its Collybus investment. After the trades, Morales directed a Commonwealth employee to mark the securities at fair market value, which created a fraudulent $19m gain for the acquiring hedge fund at the expense of the funds that sold.

Morales and Commonwealth lied to investors about the amount and value of mortgage-backed assets held in the hedge funds, and they created phony internal documents to justify their false valuations, the SEC states.

Robert Khuzami, Director of the SECs Division of Enforcemen......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: Despite bumpy June/July, CTAs hold on[more]

    Bailey McCann, Opalesque New York: To say that things have been rocky in managed futures recently is putting it mildly. In June, the industry saw its worst month on a performance basis in the past four years. Then yesterday,

  2. Investing - Hedge fund billionaires bet on London as revival gathers pace[more]

    From Bloomberg.com: London’s fund industry is bouncing back, and U.S. billionaires Steven A. Cohen and Ken Griffin are grabbing a piece of the action. Griffin’s Citadel and Millennium Management, a hedge fund run by Israel Englander, have bulked up in London, where asset growth is outpacing the U.S.

  3. Other Voices: Same day reporting and the evolving role of fund administrators[more]

    By: Scott Price, Head of Business Development and Client Management for North America, Maitland Ernst & Young’s latest glob

  4. Cowen Group, Inc. to acquire Conifer Securities[more]

    Cowen Group, Inc. and Conifer Securities, LLC had announced the signing of a definitive agreement under which Cowen will acquire Conifer Securities, the prime services division of Conifer Financial Services LLC. The transaction, the terms of which have not yet been disclosed, was approved by the boa

  5. Cargill’s Black River Asset to shut down four hedge funds[more]

    Komfie Manalo, Opalesque Asia: Cargill Inc.’s $7.4 billion Black River Asset Management said it was closing four hedge funds with a combined $ 1 billion in assets and start returning investors money over the next several months, various media said. The hedge funds represent 15% of Black River’

 

banner