Dec 12 British hedge fund adviser GLG Partners
LP and a former holding company agreed to pay about $9 million
to settle U.S. regulatory charges that internal control failures
had caused them to inflate a fund's assets and collect excessive
The U.S. Securities and Exchange Commission alleged that GLG
Partners LP had, between November 2008 and November 2010,
overvalued by about $160 million, or 60 percent, a stake that
one of its funds held in an emerging markets coal mining
Thursday's settlement arose from the SEC's Aberrational
Performance Inquiry, a program that began in 2009 to analyze the
performance data of thousands of hedge fund advisers and
identify funds with suspiciously high returns.
GLG is now part of Man Group Plc and oversees $27.7
billion of assets, its website shows.
According to the SEC, the GLG Emerging Markets Special
Assets 1 Fund had, in March 2008, paid $210 million for a 25
percent stake in the coal mining company, hoping to sell it
later in an initial public offering.
According to the SEC, after the fund's independent pricing
committee approved an initial $425 million valuation for the
stake, GLG employees on multiple occasions got information
calling that valuation into question.
But the SEC said confusion at the London-based firm over who
should address this information kept the pricing committee from
getting relevant details in a timely fashion.
As management and administration fees were based on net
asset value, GLG collected $7.77 million of inflated or excess
fees while the stake was overvalued, the SEC said.
In the settlement, GLG and its former U.S.-based holding
company GLG Partners LP agreed to give up this sum, and pay
$750,000 of civil penalties and $437,679 of interest. They also
agreed to hire an independent consultant to review its
practices. GLG did not admit or deny wrongdoing.
"Investors depend upon fund advisers to have proper controls
in place to ensure that valuations and fees are not inflated,"
SEC associate Enforcement Director Antonia Chion said in a
Matthew Dontzin, a partner at Dontzin Nagy & Fleissig
representing GLG, said: "GLG is pleased that this matter was
resolved, and the firm remains fully committed to maintaining
robust policies, procedures and practices in line with market
The case is In re: GLG Partners Inc et al, SEC
Administrative Proceeding No. 3-15641.