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Matthias Knab, Opalesque: The U.S. Securities and Exchange Commission has secured final judgments against Anthony Caine and Anish Parvataneni, two traders involved in managing options-based hedge fund strategies at LJM Funds Management, Ltd. and LJM Partners, Ltd. The SEC alleged that both individuals, along with their firms, misled investors about the risks of a "net-short volatility" trading strategy that ultimately caused steep losses during the February 2018 market volatility event.
Details: According to the SEC, LJM and its principals described their strategy to investors as conservative and market-neutral, while internally pursuing high-risk short volatility positions that were exposed to sharp market swings. The SEC also found that the firms overstated their internal risk management controls, creating a misleading sense of safety around their trading approach.
During the volatility spike of early February 2018, LJM's portfolio experienced massive losses that led to the collapse of its funds and severe financial consequences for its investors. The SEC's complaint focused on the discrepancy between what the managers told investors and what they were actually doing-particularly the lack of timely and accurate communication about portfolio risks and exposures.
Judgment and Outcome: All defendants agreed to settle the case without admitting or denying the SEC's allegations. The final judgments include civil penalties and pe...................... To view our full article Click here
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