Release: 4734-03
For Release: January 7, 2003

CFTC SETTLES ACTION AGAINST HEDGE FUND AND SUSPENDS ITS REGISTRATIONS

Beacon Hill Asset Management, LLC Agrees to Suspension of Registrations

WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) announced today that it filed a complaint seeking to suspend the registrations of Beacon Hill Asset Management, LLC, of Summit, New Jersey, a registered commodity pool operator (CPO) and commodity trading adviser (CTA), and simultaneously issued an order accepting Beacon Hill’s offer of settlement and suspending its registrations.

The CFTC alleges in the complaint that Beacon Hill, who has been registered with the CFTC as a CPO and a CTA since July 24, 1997, is subject to a statutory disqualification of its registrations based on a recent entry of a preliminary injunction by a federal court. The complaint specifically alleges that on November 13, 2002, the U.S. District Court for the Southern District of New York entered a Stipulation and Order Granting Preliminary Injunction and Other Relief (Preliminary Injunction Order) against Beacon Hill in an action brought by the Securities and Exchange Commission (SEC). That order preliminarily bars Beacon Hill from violating anti-fraud provisions of the Investment Advisers Act of 1940. The SEC’s complaint in that action alleges that Beacon Hill committed fraud by materially overstating the net asset values and materially understating the losses of certain hedge funds it managed.

In its order, the CFTC finds that the entry of the Preliminary Injunction Order constituted cause for the statutory disqualification of Beacon Hill under the Commodity Exchange Act. The order suspends Beacon Hills’s CPO and CTA registrations for six months and requires Beacon Hill to comply with an undertaking not to act as a CPO or a CTA, or to engage in any activity that requires registration as a CPO or a CTA, until the final disposition of the action brought by the SEC.
The following CFTC Division of Enforcement staff were responsible for this case: Alan Edelman, Richard Foelber, and Gretchen Lowe.

A copy of the Commission’s order may be obtained at www.cftc.gov.

Media Case Enforcement Contact:
Gretchen Lowe, Associate Director
CFTC Division of Enforcement
(202) 418-5379

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