SEC files charges against Santa Monica hedge fund manager

Peter Eichler and his fund Aletheia are alleged to have steered profitable trades into the firm's own accounts and into the accounts of preferred clients - what's referred to as a cherry-picking scheme. The SEC complaint, filed in federal court in Los Angeles, also says that investors were not informed in a timely manner when the firm ran into financial trouble. The suit had been expected - last month the feds issued a so-called Wells notice that indicates the government is considering an enforcement action. This is a civil suit, but the Justice Department is said to be looking into the case as well. From DealBook:

At its peak, Aletheia managed nearly $10 billion in assets and had a superior long-term investment track record that handily outperformed the Standard & Poor's 500-stock index. The firm's flagship growth strategy attracted business from Goldman Sachs and Morgan Stanley, which both invested their clients' money in Aletheia funds. Both banks have terminated their relationships with Aletheia. Aletheia also drew attention for its involvement in several prominent shareholder fights, including when it teamed up with the billionaire investor Ronald Burkle to wage a proxy battle with the bookseller Barnes & Noble.

Named after the Greek word for "truth and disclosure," Aletheia was started in 1997 by Mr. Eichler, a former executive at Bear Stearns. He operated the firm out of wood-paneled headquarters at 100 Wilshire Boulevard in Santa Monica, a prestigious office building with commanding views of the Pacific Ocean. But Mr. Eichler and Aletheia have been under a cloud since 2010, when a senior executive at the firm, Roger B. Peikin, filed an explosive wrongful-termination lawsuit. He depicted Mr. Eichler as a tyrannical boss who ruled Aletheia "with an iron fist" and operated the firm as his "personal fiefdom.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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