WASHINGTON (Legal Newsline) - The Securities and Exchange Commission filed complaints on Wednesday against two hedge fund managers and their firms for allegedly lying to investors about how they were handling money invested in their funds.

San Francisco-based Hausmann-Alain Banet and his firm Lion Capital Management allegedly stole more than $500,000 from a retired school teacher who thought she was investing her savings for retirement in Banet's hedge fund. In the other case, the SEC alleged that Norman Goldstein, Laurie Gatherum and their firm, Chicago-based GEI Financial Services, siphoned at least $147,000 in excessive capital withdrawals and fees from a hedge fund they managed.

Banet and Lion Capital Management allegedly led the teacher to believe his hedge fund would invest in the stock market with a long/short equity investing strategy. Instead, Banet allegedly used the money to pay his own expenses like a home mortgage, staff salaries and office rent. The U.S. Attorney's Office for the Northern District of California announced criminal charges against Banet on Wednesday in a parallel action.

Goldstein, Gatherum and GEI Financial Services allegedly failed to tell investors that they removed various performance hurdles when calculating fees, took inappropriate capital withdrawals from the fund, failed to tell advisory clients that regulators in Illinois had stripped Goldstein of his securities registrations in 2011 and violated compliance rules applicable to SEC-registered investment advisors.

The complaints represent the latest in a series of actions taken by the Asset Management of the SEC Enforcement Division against misconduct related to hedge funds.

Since the start of 2010, the SEC has filed more than 100 cases connected to hedge fund malfeasance such as hiding conflicts of interest, lying about investment performance or strategy, charging excessive fees or misusing investor assets.

"These hedge fund frauds have lured even the most sophisticated investors using the siren song of outsized returns or secured and guaranteed investments," said Robert Khuzami, the director of the SEC's Division of Enforcement. "As fraudsters increasingly capitalize on the cachet of hedge funds, we will maintain our strong presence in policing this industry."

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