WASHINGTON (HedgeWorld.com)–Another hedge fund allegedly “lulled” investors into a false sense of security, according to the Securities and Exchange Commission.
The SEC filed an emergency civil action against Fountainhead Asset Management and its founders on Friday [July 30]. The Wayne, Pa.-based firm’s founders, Anthony P. Postiglione Jr. and William J. Lennon, were charged with using investors’ assets for their personal use.
More than US$5 million from at least 18 private investors was raised in the Fountainhead Fund LP, according to the SEC complaint posted on the agency’s web site. The investor funds in the Fountainhead fund now total US$1.7 million.
The SEC believes that from November 2001 through the present, Messrs. Postiglione and Lennon sent false quarterly statements and newsletters to investors, consistently overstating the hedge fund’s value and performance.
The defendants allegedly traded the fund assets for the sole purpose of generating soft dollar credits, which they then took as cash to be used for personal living expenses. Both traders misappropriated several hundred thousand dollars of the hedge fund, the SEC states in its complaint.
Judge Legrome D. Davis in the U.S. District Court for the Eastern District of Pennsylvania ordered a temporary injunction against the defendants for expedited discovery. A hearing has been set for Aug. 5 on the SEC’s motion for a preliminary injunction.
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