This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Hedge Fund May Be Next to Pay in Fund Scandal

Veras Investment Partners, a Texas hedge fund that securities regulators contend engaged in improper trading of mutual fund shares, has set aside more than $100 million to cover the cost of a possible settlement with state and federal regulators, according to several sources.

The Sugar Land, Texas-based fund, which ceased operations a few weeks ago, notified its investors about the reserve account during a recent conference call, said sources familiar with the hedge fund and the mutual fund industry trading investigation.

Veras, which is being investigated by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission, has not been charged with any wrongdoing. But the 2-year-old hedge fund, which may have had $1 billion in assets at its height, has been linked to possible improper and illegal trading in shares of several mutual fund companies.

Sources said the amount of money set aside for settlement purposes far exceeds the $40 million the Canary Capital Partners hedge fund paid as a fine to settle with Spitzer's office. The Canary settlement and the revelations about illegal trading in mutual funds share sparked a firestorm on Wall Street and has led to a far-reaching investigation into the $7.1 trillion mutual fund industry.

Veras may have set aside up to $200 million in a settlement reserve, said sources familiar with the hedge fund and the fund industry investigation. An investor in the hedge fund said a Veras executive told him that the SEC advised the hedge fund to place as much as $100 million in an escrow account for a possible settlement with regulators.

Officials at Veras, which was started by James McBride and Kevin Larsen, declined to comment. Rich Zabel, a partner with Akin Gump Strauss Hauer & Feld, Veras' law firm, also declined to comment. Officials at the SEC and Spitzer's office also did not comment.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FII $30.06 0.87%
MMC $63.45 0.14%
AAPL $93.24 -0.41%
FB $117.81 -0.21%
GOOG $701.43 0.82%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs