New Hedge Fund Scandal Spotlights SEC Rule

Law360, New York (November 9, 2005, 12:00 AM EST) -- The Securities and Exchange Commission has initiated an investigation into another hedge fund charged with defrauding clients, in a move that adds fuel to the already fiery debate over the agency’s efforts to expand jurisdiction over the largely unregulated $1 trillion industry.

Mark Conway, manager of Massachusetts hedge fund Groundswell Partners LLC allegedly inflated the amount of the fund in reports to clients, claiming that it held $43 million when the amount was actually $14 million, the SEC is charging.

The SEC also alleges that Conway...
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