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Charlotte-based hedge fund manager Lonny Scott Bernath charged with fraud

Friday, October 16, 2015

Komfie Manalo, Opalesque Asia:

Charlotte, North Carolina-based hedge fund manager Lonny Scott Bernath was charged with defrauding his investors in at least three hedge funds over several years.

In a statement, the Securities and Exchange Commission said in its complaint filed in the U.S. District Court for the Western District of North Carolina, that between 2007 and 2011, Bernath directed three hedge funds managed by his investment advisory firm to make loans to and investments in illiquid real estate and business ventures which he also managed and in which he had personally invested.

The complaint also states that Bernath misrepresented these investment activities to the funds' investors and did not disclose them until 2013. The complaint further alleges that, from 2008 to 2011, Bernath periodically wrote down the value of these investments and loans, to the detriment of the funds' investors.

Without admitting or denying the SEC's allegations, Bernath has agreed to partially settle the case against him. The settlement is pending final approval by the court. Specifically, Bernath consented to the entry of a final judgment ordering an accounting and permanently enjoining him from future violations. The appropriate amount of disgorgement and civil penalty, if any, will be determined by the court at a later date upon motion by the SEC.......................

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