The SEC recently filed a settled enforcement action against a hedge fund manager and its founder as well as the CEO of an interested brokerage firm that provided placement agent and trade execution services to the manager’s funds, alleging that the defendants defrauded investors in several ways.  Among other things, the hedge fund manager and its founder inflated the valuation of assets held by its funds; paid excessive fees and commissions to the brokerage firm; and hired stock promoters to manipulate the price of microcap stocks held by the fund.  For discussions of other recent SEC enforcement actions involving valuation of assets, see “SEC Charges Fund Sponsor Yorkville Advisors and Its Principals with Fraud in Connection with Valuation of Fund Assets,” Hedge Fund Law Report, Vol. 5, No. 41 (Oct. 25, 2012); and “SEC Charges Hedge Fund Manager with Impermissible Cross Trades, Inflating Valuation and Misleading Investors in a Scheme to Hide Fund Losses,” Hedge Fund Law Report, Vol. 5, No. 45 (Nov. 29, 2012).  The CEO of the brokerage firm was charged with aiding and abetting the hedge fund manager’s fraud related to payments made to the brokerage firm.  This article summarizes the allegations, claims and relief sought by the SEC.