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Hedge Fund Criminally Charged With Market Timing

Law360 (March 23, 2007, 12:00 AM EDT) -- Accused of defrauding mutual fund shareholders of $2.4 million, Beacon Rock Capital LLC became the first hedge fund to be criminally charged with deceptive market timing in a U.S. federal court.

On Tuesday, in information filed in the U.S. District Court for the Eastern District of Pennsylvania, the U.S. Attorney charged Portland, Ore.-based Beacon Rock and Thomas Gerbasio, a former securities representative, with securities fraud and with aiding and abetting.

Market timing involves short-term purchases and sales of mutual fund shares to take advantage of perceived...
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