Securities and Exchange Commission

has closed a firm run by a money manager who played a key role in one of the most notorious hedge fund blowups of the past several years.

The agency said Wednesday it issued a cease and desist order for Bizri Capital Partners, a Los Angeles hedge fund firm that advised Integral Investment Management, a Dallas hedge fund sued in 2002 by the Art Institute of Chicago. The school had alleged that Integral manager Conrad Seghers lost $40 million of its endowment. A web of litigation survives Integral, which had more than $100 million under management at its peak.

In addition, the SEC banned Bizri's founder, Samer El Bizri, 30, from the securities industry for five years and imposed a $50,000 fine. In accepting the settlement, Bizri neither admitted nor denied wrongdoing, the SEC said.

According to the agency's complaint, Bizri Capital Partners' principal business was providing investment advisory services from 1998 to late 2001 to Integral Investment Management, which ran the Integral Hedging, Integral Arbitrage and Integral Equity hedge funds.

Those funds apparently blew up and were placed in receivership by a Texas court in August 2002, after shareholders -- including the Art Institute -- filed suit over the fate of their investments.

The total losses incurred by the funds have not yet been determined, and the school's litigation against Integral has not been resolved, according to Julie Getzells, general counsel for the Art Institute. The Texas receiver retains control of the funds and Integral's other assets, the SEC said.

While riding high, Seghers was known in the hedge fund industry for using a "black box" investment model, telling investors little or nothing about what he did with their money. The SEC said that between June 2000 and September 2001, Integral raised at least $71.6 million from 30 new and current investors.

According to the complaint, between June 2000 and September 2001, Integral overstated the value of its funds anywhere from 13% to 77% a month, thereby misrepresenting the rates of return.

The SEC penalized El Bizri for falsifying information to shareholders of the Galileo Fund, a now defunct Texas hedge fund through which Bizri Capital Partners invested the assets of the Integral funds.

El Bizri knew the Integral funds were issuing false reports, and "knew, or was reckless in not knowing, that investors received account statements that materially overstated the value of their interests in the funds," the complaint said.

To make up the losses, El Bizri started trading options on the

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in the Galileo Fund and managed to lose about $19 million between December 2000 and July 2001, the report said. Those were followed by additional losses of more than $10.2 million, about 22% of the funds' total assets as of Sept. 30, 2001, the SEC said.