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November 24, 2003 at 07:00 PM
NEW YORK (HedgeWorld.com)–Appalachian Trails is the latest hedge fund to be snagged in Eliot Spitzer’s net as the New York State Attorney General’s office continues its investigation of mutual fund timing.
Appalachian Trails joins other hedge fund operations already involved in Mr. Spitzer’s investigation, such as those of Canary Capital Management LLC, Secaucus, N.J., Alliance Capital Management LP, New York, and Millennium Management LLC, New York .
This case exhibits a different feel, though, because not only did the mutual fund company encourage its funds to be part of a market-timing strategy but also the founder of the mutual fund company was one of the initial investors in the hedge fund doing the alleged market timing.
Gary Pilgrim, the defendant in the Pilgrim Baxter mutual fund timing case, managed the PBHG Growth fund and also was among the first investors in Appalachian Trails LP, maintaining a substantial ownership interest in Appalachian, according to a complaint filed in New York State Supreme Court today.
The compliant alleges that, with the knowledge and consent of Chairman and CEO Harold Baxter, Appalachian was allowed to “feverishly” trade in and out of the PBHG Growth Fund and to trade in other funds. The New York State Attorney General’s office also charges that Appalachian made nearly 100 exchanges in and out of the PBHG Growth Fund in 2000 and 2001.
