South Florida Arbitration & Litigation Lawyer Blog
Securities and Exchange Commission v. Randal Kent Hansen, et al., Civil Action No. 13-cv-01403 (S.D.N.Y., filed March 1, 2013)
SEC Charges Advisers to the RAHFCO Hedge Funds with Fraud
The Securities and Exchange Commission (“Commission”) recently filed a civil injunctive action in the United States District Court for the Southern District of New York relating to the fraudulent offer and sale of limited partnership interests in two hedge funds — RAHFCO Funds LP and RAHFCO Growth Fund LP (collectively “RAHFCO Hedge Funds”). The Commission charged RAHFCO Management Group, LLC (“RAHFCO Management”), a Delaware corporation and general partner of RAHFCO Hedge Funds; its principal, Randal Kent Hansen of Sioux Falls, South Dakota; Hudson Capital Partners Corporation (HCP), a New York corporation, the sub-adviser/portfolio manager of RAHFCO Hedge Funds; and Vincent Puma of Morganville, New Jersey, the principal of HCP, with securities fraud, among other violations of the securities laws, for engaging in a fraudulent scheme that defrauded investors out of more than $10 million.
The Commission’s complaint alleges that the RAHFCO Hedge Funds raised approximately $23.5 million from over 100 investors nationwide between 2007 and the funds’ collapse in about May 2011. Additionally, the complaint alleges that the primary function of the Defendants’ scheme was to convince investors to invest in fraudulent pooled investments that purportedly traded in options and futures on the S&P 500 Index and in equities, then the Defendants siphoned off the invested funds for the Defendants’ own purposes. The complaint also alleges that, in furtherance of their fraud, Defendants engaged in schemes to defraud investors and made material misrepresentations to investors and others.
The Commission’s complaint alleges that all of the defendants violated the antifraud provisions of the securities laws in Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. The complaint also alleges that Hansen and RAHFCO Management violated Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 and that Puma and HCP aided and abetted these violations. Finally, the complaint alleges that Hansen and RAHFCO Management violated Section 15(a) of the Exchange Act by acting as unregistered broker-dealers. The Commission’s complaint seeks permanent injunctions, third-tier civil penalties, disgorgement plus prejudgment interest, and other relief against all of the defendants.
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