Thu, Mar 30, 2017
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 SEC�s 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: FS Investments launches energy fund[more]

    Bailey McCann, Opalesque New York: $19 billion Philadelphia-based FS Investments has launched a new interval fund which will invest in energy. The FS Energy Total Return Fund is the firm's first closed-end interval fund and will invest opportunistically in energy companies and assets. FS

  2. Opalesque Exclusive: Aberdeen makes the case for the lower mid-market[more]

    Bailey McCann, Opalesque New York: Aberdeen Asset Management has released a new paper focused on lower mid-market private equity. According to the paper, this segment of the private equity market is gaining popularity with private equity investors that are looking for multiple expansion and less

  3. Hedge funds await outcome of French elections, feel pinch on lower oil prices & weak dollar[more]

    Komfie Manalo, Opalesque Asia: Hedge funds felt the pinch of lower oil prices and weak U.S. dollar as the Lyxor Hedge Fund Index was marginally down as of the week ending 14 March, Lyxor Asset Management said in its Weekly Briefing. The Lyxor He

  4. Opalesque Exclusive: Swiss start-up and German fund manager to launch AI hedge fund[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: NNAISENSE, a Swiss start-up that develops artificial intelligence (AI) and machine learning applications, and

  5. Eric Mindich to shutter hedge fund Eton Park after difficult 2016[more]

    Komfie Manalo, Opalesque Asia: Erich Mindich is shutting down his hedge fund Eton Park after losing 9% in 2016 and its assets falling by $2bn to the current $7bn, Reuters reported. Mindich told investors