SEC Continues Pre-Action Probe of Stilwell Inter-Fund Loans

The U.S. District Court for the Southern District of New York recently ordered hedge fund principal Joseph D. Stilwell to show cause why he should not give additional testimony to the SEC in connection with the SEC’s investigation of the circumstances surrounding a number of inter-fund loans between funds advised by Stilwell Value, LLC.  Stilwell first testified about certain inter-fund loans in 2013.  However, the SEC claimed that it received evidence of additional inter-fund loans earlier this year and is seeking to compel Stilwell to give additional testimony.  For more on transactions among hedge funds, see “Katten Forum Identifies Best Practices for Hedge Fund Managers Regarding Best Execution, Soft Dollars, Principal Trades, Agency Cross Trades, Cross Trades and Trade Errors,” Hedge Fund Law Report, Vol. 7, No. 10 (Mar. 13, 2014).  For more on transactions between hedge fund managers and funds, see “When and How Can Hedge Fund Managers Engage in Transactions with Their Hedge Funds?,” Hedge Fund Law Report, Vol. 4, No. 45 (Dec. 15, 2011).  For more on loans from hedge funds to managers, see “Important Implications and Recommendations for Hedge Fund Managers in the Aftermath of the SEC’s Settlement with Philip A. Falcone and Harbinger Entities,” Hedge Fund Law Report, Vol. 6, No. 33 (Aug. 22, 2013).

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