INTERNATIONAL: US SEC Charges UK Hedge Fund Adviser for Internal Control Failures

Friday December 13 2013

The US Securities and Exchange Commission (SEC) has charged a London-based hedge fund adviser and its former US-based holding company with internal controls failures that led to the overvaluation of a fund’s assets and inflated fee revenue for the firms.

GLG Partners L.P. and its former holding company GLG Partners Inc. agreed to pay nearly $9 million to settle the SEC’s charges. According to the SEC’s order instituting settled administrative proceedings, the GLG firms managed the GLG Emerging Markets Special Assets 1 Fund. From November 2008 to November 2010, GLG’s internal control failures caused the overvaluation of the fund’s 25 percent private equity stake in an emerging market coal mining company. The overvaluation resulted in inflated fees to the GLG firms and the overstatement of assets under management in the holding company’s filings with the SEC.

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