12.7.2009 The SEC issued an order against Simpson Capital Management, Inc., Robert A. Simpson, and John C. Dowling, finding that, between May 2000 and September 2003, Simpson, the President and founder of Simpson Capital, a hedge fund manager, conducted a fraudulent scheme involving unlawful “late trading” in shares of mutual funds. Dowling, Simpson Capital’s head trader, began participating in the scheme in November 2000. The late trading was allegedly part of a profitable investment strategy dependent upon the execution of mutual fund trades based on post-4:00 p.m. market information not reflected in the price they paid for the shares. According to the SEC, Simpson profited through his investment in the managed funds, and Simpson Capital, which Simpson owns, received management and performance fees.
The Order censures Simpson Capital; orders that Simpson Capital, Simpson, and Dowling cease-and-desist from committing or causing any violations and any future violations of federal securities laws; orders that Simpson Capital and Simpson be jointly and severally liable for disgorgement of $6,100,000 and a civil money penalty of $550,000; orders that Dowling pay a civil money penalty of $150,000; and suspends Simpson and Dowling from association with any investment adviser and from serving or acting as an employee, officer, director, member of an advisory board, investment adviser, or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter for a period of 12 months. Simpson Capital, Simpson, and Dowling consented to the issuance of the Order without admitting or denying any of the findings in the Order.
Click http://www.sec.gov/litigation/admin/2009/34-61123.pdf to access the order.