Hedge Fund of Funds Manager Principal Charged with Securities Fraud and Wire Fraud over Misrepresentations Concerning Fund Performance and Investment Due Diligence

The U.S. has filed a seven-count indictment against Chetan Kapur, the sole principal of hedge fund manager Lilaboc, LLC, d/b/a ThinkStrategy Capital Management, LLC (ThinkStrategy).  Kapur is charged with securities, investment adviser and wire fraud arising out of his alleged misrepresentations to investors regarding due diligence of fund investments and fund performance.  Kapur and ThinkStrategy have previously settled civil charges brought by the SEC in connection with the same matters.  See “Private Lawsuits Against Hedge Fund Managers Can Be Important Sources of Examination and Enforcement ‘Leads’ for the SEC,” Hedge Fund Law Report, Vol. 4, No. 42 (Nov. 23, 2011).  This article summarizes the background in this case (including a discussion of the enforcement action initiated by the SEC and the private investor suit brought against Kapur and ThinkStrategy) and outlines the criminal charges levied against Kapur.  See also “Federal Court Decision Holds That a Fund of Funds Investor May Sue a Fund of Funds Manager That Fails to Perform Specific Due Diligence Actions Promised in Writing and Orally,” Hedge Fund Law Report, Vol. 4, No. 27 (Aug. 12, 2011).

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