Allegations of lies, false promises and lack of disclosure led the Securities and Exchange Commission to sue Wood River Capital Management, accusing the Idaho-based hedge fund and its manager John Whittier of fraud.

According to the agency, the defendants "repeatedly made material misrepresentations regarding the oversight diversification of two hedge funds managed by John H. Whittier, Wood River Partners L.P. and Wood River Partners Offshore Ltd." It also says Whittier failed to conduct audits.

The SEC action is the latest black eye for the fund. According to the SEC and press accounts, Wood River investors have been trying for several weeks to get their money out after BNP Paribas, acting on behalf of a client, had a $49 million redemption request turned down.

Payment was due at the end of last month, but Whittier, a former analyst at Donaldson, Lufkin & Jenrette, failed to deliver. According to the SEC, Whittier claimed that he did not have the liquidity to return the funds.

The most significant charge in the SEC complaint is that Whittier didn't disclose a large position in a small wireless stock. In its offering memorandum, Whittier promised not to invest more than 10% in any given long position. According to the SEC, as much as 65% of Wood River's portfolio was long Endwave ( ENWV) in July, a time during which Whittier claimed to have $265 million in total funds under management.

EndWave closed at $12.69 yesterday, down 64% from its $34.90 price at the end of July.

The fund was also said to be remiss in its accounting oversights. In the offering memorandum, Wood River stated that it had hired American Express Tax and Business Services to audit its books at the end of each fiscal year. The SEC says the American Express outfit doesn't even perform audits. In addition, several investors who had asked to receive the audited financial statements for 2004 never obtained them, the complaint states.

Sources say directors of the Wood River Partners Offshore met Monday and elected Donald Seymour as lead director. Whittier did not participate to this meeting, during which board members called for his resignation and decided to suspend the calculation of the fund's net asset value. The next day, about 20 investors and their representatives held a conference call, says Seymour, during which Whittier was also absent.

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