MedCap Settles SEC 'Portfolio Pumping' Action

Law360, New York (October 17, 2008, 12:00 AM EDT) -- San Francisco-based investment adviser MedCap Management & Research LLC and its managing member have agreed to shell out more than $170,000 to settle the U.S. Securities and Exchange Commission's claim that they used a “portfolio pumping” scheme to artificially inflate the value of a hedge fund they ran.

On Thursday, the SEC filed a settled administrative proceeding against MedCap and Charles Frederick Toney Jr., accusing the defendants of reporting misleading results to hedge fund investors.

Toney made extensive quarter-end purchases of a penny stock that his...
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