The SEC has settled its claims against Martin Currie, a Scotland-based fund management group. It was contended by the agency that the group fraudulently used one of its U.S. fund clients to rescue another client, a China-focused hedge fund struggling in the midst of the global financial crisis. Martin Currie agreed to pay a total of nearly $14 million to the SEC and the United Kingdom’s Financial Services Authority to settle the charges that it steered a U.S. publicly-traded fund called The China Fund Inc. into an investment to bolster the hedge fund.
The hedge fund had acquired a significant and largely illiquid exposure to a single Chinese company. It was stated by the SEC that Martin Currie directly alleviated the hedge fund’s liquidity problems by deciding to use the China Fund — to the detriment of the fund and its shareholders — in a bond transaction that reduced the hedge fund’s exposure.
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