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October 25, 2002 at 08:00 PM
NEW YORK (HedgeWorld.com)– The Securities and Exchange Commission instituted public administrative proceedings against Hoover Capital Management and its owner, Stevin Hoover, for violating the antifraud provisions of the Advisers Act.
The SEC will schedule a hearing before an administrative law judge to determine whether the allegations against Mr. Hoover are true, to give him an opportunity to dispute them and to decide what, if any, sanctions are appropriate. In the related criminal case, Mr. Hoover has pled guilty to a single count of securities fraud last August, in connection to using around $200, 000 from client accounts during 1997 to 1998 to pay for personal expenses. The administrative hearing is based on that plea.
In still-pending civil action, the SEC alleges that Mr. Hoover misappropriated nearly US$3 million from clients, including Chestnut Fund, a hedge vehicle he ran through his unregistered investment firm, Chestnut Management. The Commission claims that Mr. Hoover misrepresented the hedge fund to potential investors, misappropriated money from the fund and concealed this with fictitious account statements.
