On December 16, 2008, the Ontario Securities Commission (OSC) accused Otto Spork, the founding manager and “driving force” of Sextant Capital Management Inc. (SCMI), of perpetrating a complex investment fund fraud between July 2007 and December 2008.  On April 5, 2010, the OSC released a revised set of allegations against SCMI.  It alleges that SCMI, the investment fund adviser, Sextant Capital GP, manager of the Sextant Canadian Fund, and Spork engaged in fraud by: (1) selling investment fund units at falsely inflated values; (2) taking millions of dollars in fees based on the falsely inflated values; and (3) misappropriating money from the investment funds.  See In the Matter of Sextant Capital Management Inc., et al. (April 5, 2008).  Spork allegedly perpetrated the fraud through three investment funds: the Sextant Strategic Opportunities Hedge Fund L.P.; the Sextant Strategic Hybrid²Hedge Resource Fund Offshore Ltd.; and the Sextant Strategic Global Water Fund Offshore Ltd. (the Sextant Funds).  Together, the Sextant Funds raised in excess of $80 million from Canadian and offshore investors.  Two days later, on April 7, 2010, the SEC announced administrative proceedings against Morgan Keegan & Company and Morgan Asset Management (MAM) as well as two of its employees, accusing them of defrauding investors by deliberately inflating the value of risky securities backed by subprime mortgages.  The SEC accuses Morgan Keegan of failing to employ reasonable procedures to internally price the portfolio securities in five funds managed by MAM, thereby, miscalculating the net asset values of the funds.  We detail the background of both actions and their implications for the hedge fund industry.