COO Fined and Barred for Facilitating Insider Loan to His Boss
The Chief Operating Officer of a hedge fund agreed to a $200,000 fine and an industry bar and admitted wrongdoing in connection with allowing the firm’s principal to obtain a loan from the fund. The defendant acknowledges that he signed the loan agreement but failed to ensure that the fund obtained independent legal advice and failed to ensure the fund charged an above market interest rate. Julie M. Riewe, co-chief of the SEC Enforcement Division’s Asset Management Unit said “This settlement shows that we hold accountable not only those who perpetrate a scheme, but also those who enable them.”
OUR TAKE: While the SEC does not require a person to become a whistleblower, the regulator will prosecute insiders who allow wrongdoing to occur.