A former hedge fund trader has been sentenced to prison in the U.S. for his role in a US$100 million securities mismarking scheme.
U.S. authorities announced that Jeremy Shor, a former trader with Premium Point Investments L.P. (PPI), has been sentenced to 40 months in prison and three years of supervised relief after being convicted of fraud-related offences in connection with a mismarking scheme that inflated the value of hedge funds managed by PPI.
The U.S. Department of Justice (DoJ) said that PPI obtained inflated quotes and manipulated its valuation process to inflate the value of securities held by its funds, which enabled the firm to charge higher management and performance fees, and to prevent investor redemptions.
Audrey Strauss, U.S. attorney, said that the mismarking enabled the firm to “hide its true financial health from investors. Had investors known the truth, they likely would have redeemed their investments.”
“Shor’s prison sentence underscores the seriousness of his crimes and the need for honest, accurate reporting by financial institutions to their investors,” she added.
The firm’s founder, CEO and CIO, Anilesh Ahuja, who was also convicted in the case, will be sentenced on Nov. 25.