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1
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COMPLAINT
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EXTRACTED KEY WORDS
FUNDS INVESTORS SECURITIES MANAGEMENT ASSETS ACT SAFE HARBOR PARTNER ADVISERS ACT MILESTONE COMMISSION RELIEF DEFENDANTS BRISTOL COURT HEDGE FUNDS VIOLATIONS MASTER BEACON HILL STEARNS BEAR REPORT ALLEGES DELAWARE DISTRICT TRANSACTIONS NAVS MORTGAGE-BACKED SECURITIES LAWS GENERAL PARTNER |
Glenn A. Harris
David L. Kornblau
Securities and Exchange Commission
450 Fifth Street, N.W., Mail Stop 0911
Washington, D.C. 20549
(202) 942-7934 (G. Harris)
(202) 942-9581 (facsimile)
United States District Court
Southern District of New York
:
Securities and Exchange Commission, :
:
Plaintiff, : :
v. :
:
:
BEACON HILL ASSET MANAGEMENT LLC, :
A Delaware limited liability company,
:
:
Defendant. : ___ Civ.
:
and : COMPLAINT
:
BEACON HILL MASTER, LTD., a Cayman Islands entity; BRISTOL :
FUND, LTD., a Cayman Islands entity; SAFE HARBOR FUND L.P., a :
New Jersey limited partnership and its general partner, SAFE HARBOR :
ASSET MANAGEMENT LLC, a New Jersey limited liability company; :
MILESTONE PLUS PARTNERS L.P., a Delaware limited partnership, and :
its general partner, MILESTONE GLOBAL ADVISORS, L.P., a Delaware :
limited partnership, :
:
Relief Defendants :
:
Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint against
Beacon Hill Asset Management LLC ("Defendant"), Beacon Hill Master, Ltd., Bristol Fund, Ltd.,
Safe Harbor Fund L.P. and its general partner, Safe Harbor Asset Management LLC, and
Milestone Plus Partners L.P. and its general partner, Milestone Global Advisors, L.P.
(collectively "Relief Defendants"), alleges the following:
Nature of the Action
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2
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LITIGATION RELEASE 17841
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EXTRACTED KEY WORDS
FUNDS INVESTMENT REPORT INVESTMENT MANAGER COMPLAINT COURT LOSSES HEDGE FUNDS COMPLAINT ALLEGES BEACON HILL ASSET RELIEF PRELIMINARY INJUNCTION SECURITIES CLIENTS MASTER SAFE HARBOR BRISTOL FUND FEEDER GRANTING DISTRICT LLC EXCHANGE COMMISSION FILE PERIODIC REPORTS EXTRAORDINARY PAYMENTS WITHDRAWALS REDEMPTIONS LONGER MANAGING DEFENDANTS CONTROLLING ENTITIES |
U.S. Securities and Exchange Commission
Washington, D.C.
Litigation Release No. 17841 / November 15, 2002
Civil Action No. 02 CV 8855 (LAK) (S.D.N.Y.)
Court Enters Preliminary Injunction and Other Relief Against Beacon Hill
Asset Mananegement, LLC.
The Securities and Exchange Commission announced that, on November 13,
2002, Judge Lewis A. Kaplan of the Southern District of New York,
issued a Stipulation and Order granting the Commission's motion for a
preliminary injunction against Beacon Hill Asset Management LLC
(Beacon Hill) and other relief. Beacon Hill and the other parties
consented to the court's order.
The Commission's Complaint, filed on November 7, 2002 alleges that
Beacon Hill, located in Summit, New Jersey, managed three "feeder"
hedge funds -- Bristol Fund, Ltd., Safe Harbor Fund L.P., and
Milestone Plus Partners L.P. -- as well as a "master" fund, Beacon
Hill Master, Ltd., through which the feeder funds conducted trading.
The funds principally invested in the mortgage-backed securities
markets on a leveraged basis. The Complaint alleges that, for at least
the periods ending July 31, August 31, and September 30, 2002, Beacon
Hill reported net asset values and corresponding returns to fund
investors that it knew or should have known were materially
overstated. Among other things, on October 8, Beacon Hill reported to
investors that the Safe Harbor and Bristol funds had suffered losses
estimated at 25% during the month of September. On October 17,
however, Beacon Hill reported to investors that losses were
approximately 54% -- more than double the amount reported on October 8
-- including losses that had not been reported during prior periods.
The Commission's Complaint alleges that Beacon Hill violated Section
206(2) of the Investment Advisers Act of 1940, which prohibits
transactions, practices, and courses of business which operate as a
fraud or deceit upon investment advisory clients and prospective
clients. The Complaint names the hedge funds and their controlling
entities as "relief" defendants.
In addition to granting a preliminary injunction against Beacon Hill,
the court's order requires that
* Beacon Hill and the hedge funds report to the court within 10 days
that Beacon Hill is no longer managing the funds and that a new
investment manager is in place;
* No redemptions, withdrawals, distributions, or extraordinary
payments be made from the funds without court approval;
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3
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LITIGATION RELEASE 17831
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EXTRACTED KEY WORDS
BEACON HILL INVESTMENT MANAGER REPORT HEDGE FUNDS COURT COMPLAINT ALLEGES ASSET MANAGEMENT SAFE HARBOR VIOLATION CONTROLS MILESTONE BRISTOL FUND BEACON HILL MASTER DISTRICT INVESTMENT ADVISERS ACT LLC CIVIL EXCHANGE COMMISSION SECURITIES LOSSES FEEDER ADVISORS CONTROLLING ENTITIES RELIEF PENALTIES DISGORGEMENT PERMANENT INJUNCTION HILL REPORTED NET |
Securities and Exchange Commission
Washington, D.C.
Litigation Release No. 17831 / November 7, 2002
CIVIL ACTION NO. 02 CV 8855 (LAK), (S.D.N.Y.)
SEC Charges Hedge Fund Manager Beacon Hill Asset Management, LLC
Beacon Hill and Funds Consent to Court-Ordered Controls
On November 7, 2002, the Securities and Exchange Commission charged
Beacon Hill Asset Management LLC (Beacon Hill), a hedge fund manager
located in Summit, New Jersey, with a violation of the anti-fraud
provisions of the Investment Advisers Act. The , filed in the U.S.
District Court for the Southern District of New York, alleges that at
least during July through September 2002, Beacon Hill reported net
asset values and corresponding returns to fund investors that it knew
or should have known were materially overstated. In addition to a
permanent injunction against future violations, disgorgement and civil
penalties, the Commission is seeking substantial preliminary relief,
that Beacon Hill, its managed hedge funds (Beacon Hill Master, Ltd.,
Bristol Fund, Ltd., Safe Harbor Fund L.P., and Milestone Plus Partners
L.P.), and controlling entities of the hedge funds (Safe Harbor Asset
Management, LLC and Milestone Global Advisors, L.P.) have agreed to.
Under the terms of a stipulation to be filed with the court, and
subject to the approval of the Court
* Beacon Hill will be preliminarily enjoined from violating Section
206(2) of the Investment Advisers Act of 1940;
* Beacon Hill and the hedge funds will report to the court within 10
days of entry of the order that Beacon Hill is no longer managing
the funds and that a new investment manager is in place;
* Court approval will be required for redemptions, withdrawals, or
distributions from the funds, as well as for extraordinary
payments;
* The funds will require the new investment manager to file periodic
reports with the court, the SEC, and investors; and
* Beacon Hill will be required to preserve all relevant documents
and to cooperate fully to enable the new investment manager to
perform its duties.
The Commission's Complaint alleges that Beacon Hill managed three
"feeder" hedge funds -- Bristol, Safe Harbor, and Milestone -- as well
as a "master" fund (Beacon Hill Master) through which the feeder funds
conducted trading. The funds principally invested in the
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