Court Enters Injunction Against Beacon Hill

SUMMIT, NJ-Judge Lewis A. Kaplan of the Southern District of New York has issued an order granting a preliminary injunction against Beacon Hill Asset Management, based here. The action follows a motion by the Securities and Exchange Commission relating to several funds operated by the hedge fund manager. Beacon Hill has consented to the order, but would not provide further comment.

Earlier this month, the SEC had filed a complaint with the court alleging that Beacon Hill mismanaged three “feeder” hedge funds–Bristol Fund Ltd., Safe Harbor Fund LP and Milestone Plus Partners LP–and one “master” fund, Beacon Hill Master Ltd., through which the feeder funds traded. The funds mostly invested in the mortgage-backed securities markets on a leveraged basis.

Specifically, the SEC charged that for the recently ended quarter, Beacon Hill “reported net asset values and corresponding returns to fund investors that it knew or should have known were materially overstated,” according to the complaint. Among other things, the SEC alleges, Beacon Hill reported on Oct. 8 that the Safe Harbor and Bristol funds had suffered losses estimated at 25% during the month of September. On Oct. 17, however, the fund manager reported losses of 54%, or more than double the earlier amount, including losses that hadn’t been reported during prior periods.