Lancer Management Group LLC Hedge Fund Manager Acquitted of Charges He Ran Market Manipulation Scam

A jury has acquitted Lancer Management Group LLC hedge fund manager Michael Lauer of securities fraud charges accusing him of running a stock-pricing scheme believed to cost investors of more than $200 million. After over three days of deliberation, Lauer was found not guilty of conspiracy in connection with the alleged scam and the charge of wire fraud.

The government had accused Lauer and an associate of buying restricted stock of shell companies as far back as 1999 and telling brokers to purchase a smaller quantity of shares from the same company at higher, open-market prices so that a targeted price could be hit. Lauer allegedly would then falsely value the firm’s securities at higher closing prices. Prosecutors said this would artificially inflate the investment returns of the funds, resulting in lucrative fees for fund officials as new investors were drawn in. Lauer was also accused of creating bogus portfolios of the securities that Lancer Group held and getting falsely inflated appraisals of the shell companies. He and others allegedly made over $40 million.

In 2008, the Securities and Exchange Commission was granted summary judgment in its civil case against Lauer over related alleged misconduct. The court ordered him to pay about $62 million in disgorgement plus prejudgment interest. That securities fraud case is under appeal.

Lauer has always maintained that it was a shady consultant that damaged the hedge fund. Also acquitted of related criminal charges was Lancer manager Martin Garvey.

Related Web Resources:
Lancer Group Founder Michael Lauer Acquitted of Stock Fraud in Hedge Funds, Bloomberg, April 27, 2011

Lancer Founder Wins Acquittal, Hedgefund.net, April 27, 2011

Michael Lauer to Pay More Than $62 Million in Hedge Fund Fraud Case, SEC, May 8, 2009

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