NEW YORK (HedgeWorld.com)–A federal judge in New York, responding to an emergency enforcement action filed Wednesday [Aug. 11] by the Securities and Exchange Commission, ordered the assets of hedge fund Sterling Watters Group LP frozen and a full accounting of the firm’s assets conducted immediately.
In addition, the assets of the fund’s general partners, Sterling Watters Capital Advisors LLC and Sterling Watters Capital Management Inc., were frozen. The SEC’s enforcement action also names the fund’s principal, Angelo Haligiannis.
In its complaint, SEC officials allege Mr. Haligiannis and his Sterling Watters hedge fund raised US$27 million by lying to investors and potential investors about the fund’s performance and its assets under management. Mr. Haligiannis sent out falsified accounting statements showing made-up quarterly and annual investment gains and account balances, according to SEC officials. He and others involved with the fund also inflated the fund’s returns in marketing materials shown to prospective investors.
“As recently as two weeks ago, Sterling Watters sent investors quarterly account statements that showed an aggregate of tens of millions of dollars of investor equity in the fund,” according to an SEC statement. “In fact, the Fund’s brokerage records show that the fund has lost money over the years and is now essentially worthless.”
Attempts to reach Sterling Watters were unsuccessful. Neither of two phone numbers listed for the firm in New York worked. Attempts to reach Mr. Haligiannis also were unsuccessful. A number attached to a directory listing for him in New York had been disconnected.
The fund did register www.sterlingwatters.com as its web site, although no site appears to have been built. In documents filed in connection with that registration the firm listed Banc of America Securities LLC as an “administrative contact.” A B of A representative could not confirm by press time what relationship, if any, the bank had with Sterling Watters.
An SEC lawsuit against the fund and Mr. Haligiannis is pending.
Contact Robert F. Keane with questions or comments at: firstname.lastname@example.org.