Fund Manager Settles SEC 'Side Pocket' Suit For $14M

Law360, New York (March 1, 2011, 7:44 PM EST) -- A California hedge fund manager will pay a $14 million settlement with the U.S. Securities and Exchange Commission over allegations that he hid $12 million from investors through so-called side pocket investments.

According to the complaint, filed in the U.S. District Court for the Northern District of California, Lawrence R. Goldfarb and his company, Baystar Capital Management LLC, diverted the money to other entities under Goldfarb's control and used it to invest in real estate and a San Francisco record company.

Baystar was the investment adviser...
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