SEC Takes Adviser To Task For Endorsing Bayou

Law360, New York (April 22, 2009, 12:00 AM EDT) -- The U.S. Securities and Exchange Commission has found that an investment adviser did not perform key elements of due diligence before recommending that clients invest with collapsed hedge fund Bayou Group LLC.

In a settled administrative proceeding filed Wednesday, the SEC found that New York-based Hennessee Group LLC and its principal, Charles J. Gradante, failed to conduct a reasonable investigation into red flags concerning Bayou.

The commission told Hennessee Group and Gradante to pay nearly $815,000 in disgorgement, civil penalties and prejudgment interest. The SEC also...
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