The Descartes Athena Fund, which is domiciled in the Cayman Islands, was frozen by the SFC in April 2009 in a bid to protect the interests of the 340 investors.
The fund managers of the private hedge fund allegedly issued false documents from a major accounting firm and sent the SFC forged account statements and subscription contracts.
“The SFC alleges that the Athena Fund was an outright fraud,” said the SFC’s executive director of enforcement, Mark Steward. “Our action to have the assets frozen prevented them from disappearing into the perpetrators’ pockets and will enable most investors to recover a substantial portion of their investments.”
Illegally transferred
The fund was run by Descartes Investment Management and Descartes Global Asset Management. Together with Descartes Finance, the three subsidiaries make up the Descartes Group.
“Our action to have the assets frozen prevented them from disappearing into the perpetrators’ pockets"
The commission said the fund managers were not running the fund from Hong Kong and their whereabouts are unknown.
During early proceedings, the SFC traced the assets from the Athena Fund and found most of the securities sitting with UK-based accounting firm, NBS, where they had been illegally transferred.
When the SFC made an application to the court requesting to freeze the assets, NBS resisted and said it was entitled to retain these securities because it was a nominee of an investor in the fund, Bestmega.
However, the SFC disagreed with this claim, arguing that the securities were illegally transferred by the Athena Fund to Bestmega, which meant both NBS and Bestmega were liable to restore the Athena Fund to the original position before the alleged illegal transfer.
An agreement, which is subject to court approval, has been made between the SFC, NBS and Bestmega, and does not find either NBS or Bestmega guilty of a criminal offence.
