The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Fri, 11 Jun 2021 14:18:26 +0000 en-US hourly 1 https://wordpress.org/?v=5.7.2 SEC Charges Hedge Fund Adviser for Prohibited Transactions and Retaliating Against Whistleblower https://corpgov.law.harvard.edu/2014/07/27/sec-charges-hedge-fund-adviser-for-prohibited-transactions-and-retaliating-against-whistleblower/ https://corpgov.law.harvard.edu/2014/07/27/sec-charges-hedge-fund-adviser-for-prohibited-transactions-and-retaliating-against-whistleblower/#respond Sun, 27 Jul 2014 13:00:07 +0000 http://blogs.law.harvard.edu/corpgov/?p=64804?d=20141215150228EST Posted by Yaron Nili, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Sunday, July 27, 2014
Editor's Note: The following post comes to us from David A. Vaughan and Catherine Botticelli, Partners at Dechert LLP, and is based on a Dechert legal update authored by Mr. Vaughan, Ms. Botticelli, Brenden P. Carroll, and Aaron D. Withrow.

The U.S. Securities and Exchange Commission (SEC or Commission) issued a cease and desist order on June 16, 2014 (the Order) against Paradigm Capital Management, Inc. (Paradigm) and its founder, Director, President and Chief Investment Officer, Candace King Weir (Weir). [1] The Order alleged that Weir caused Paradigm’s hedge fund client, PCM Partners L.P. II (Fund), to engage in certain transactions (Transactions) with a proprietary account (Trading Account) at the Fund’s prime broker, C.L. King & Associates, Inc. (C.L. King). Paradigm and C.L. King were allegedly under the common control of Weir. The Order further alleged that, because of Weir’s personal interest in the Transactions and the fact that the committee designated to review and approve the Transactions on behalf of the Fund was conflicted, Paradigm failed to provide the Fund with effective disclosure and failed effectively to obtain the Fund’s consent to the Transactions, as required under the Investment Advisers Act of 1940 (Advisers Act).

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