Remember Ethan Kass, the son of well-known hedge fund manager Doug Kass (shown here)?
He was the then-25-year-old processing clerk at fund Circle T who allegedly made unauthorised trades in 2005 — including a big position against Google — and lost $8.5 million.
Now, he’s settled with the SEC for $50,000, without admitting or denying the allegations.
Here’s how the SEC says he lost the millions.
SEC: On at least 24 occasions, Kass traded without any authorization or direction from his supervisors. Kass routinely concealed his unauthorised trading from his supervisors by intentionally omitting such trades from Tobias’s internal records, including its handwritten trade blotter, and by deleting, altering or manipulating information in Tobias’s internal portfolio management system so that his unauthorised trades would not appear on that system’s daily real-time profit and loss statements.
Kass was fired immediately, but the late-Seth Tobias, then General Partner of Circle T, then sued Bank of America, saying the bank’s prime broker unit should have pointed out Kass’ unusual activity. BofA paid Circle T after an NASD arbitration panel ruled against it for “negligence, breach of contract and breach of fiduciary duty.”
(Separately, Tobias was found dead in 2007 in the pool of his Jupiter, Florida mansion under mysterious circumstances.)
Here’s the SEC filing.
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