Hedge trader slapped with $291M fine
Paul Eustace will pay more than $279 million in restitution to settle charges that he defrauded commodity pool participants.
A U.S. District Court in Pennsylvania has ordered former hedge fund trader Paul Eustace to pay more than $291 million to settle charges that he defrauded commodity pool participants.
Mr. Eustace was ordered to pay more than $279 million in restitution and a $12 million civil penalty.
In July 2007, he was charged with solicitation and regulation violations for operating the pools and for concealing losses by issuing false account statements.
Additionally, Mr. Eustace was accused of misappropriating assets of two of the funds and for receiving incentive and management fees through his fraudulent operation of the pools.
The court also imposed permanent trading and registration bans on his company, Philadelphia Alternative Asset Management Co.
The Commodities Futures Trading Commission filed a complaint against PAAM in June 2005, alleging that Mr. Eustace concealed $200 million in losses from participants in the commodity pools that he managed.
The SEC actions against Mr. Eustace and PAAM follow a December 2007 settlement, in which registered futures commission merchant MF Global Inc. of New York and one of its employees, Thomas Gilmartin, agreed to pay more than $2.25 million in civil penalties for their failure to supervise Mr. Eustace.
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