In a U.S. mutual fund late-trading case involving a British hedge fund firm and its chief, the penalty just rose to record levels. The Financial Times reports
that last week the U.S. District Court in Southern New York raised Lewis Chester
and Pentagon Capital Management
's fine to $98.6 million, reportedly the highest such fine ever imposed on a foreign national.
The initial verdict in the case came down in February, when the same court ruled that Chester and Pentagon defrauded US mutual funds by late-trading between 1999 and 2003 [see MFWire.com, 2/17/2012
]. At the time, the court also tossed out the SEC's claims that Pentagon also engaged in mutual fund market timing over the same time period.
The fine was initially set at $76.9 million. Chester, according to the FT
, plans to file an appeal and is telling his investors that the SEC's actions in the case were "unjust."
The charges against Chester were first filed as part of a long-running probe in mutual fund trading spearheaded by Eliot Spitzer, then-attorney-general (and later governor) of New York.
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