Ex-Moore Trader, Firm to Pay $2.5 Million in Disclosure Case

  • Tim Leslie misallocated trades in James Caird funds, SEC says
  • Regulator’s claims stem from dealings between two hedge funds

Hedge fund manager Tim G. Leslie and his firm James Caird Asset Management will pay more than $2.5 million over U.S. Securities and Exchange Commission claims that they misallocated trades between two funds and misled investors.

Leslie, 49, misallocated trades between his main $2 billion fund, which made shorter-term investments, and a $100 million closed-end credit fund designed to make long-term investments in hard-to-sell assets, according to an SEC complaint released Friday. Leslie will pay $2.1 million and his London-based James Caird will pay $400,000, the agency said.

Leslie benefited from the trades as he had invested twice as much of his own money in the credit fund and owned a larger part of it than he did with the main fund, JCAM Global, the SEC said. The owner of an investment firm, which the regulator identifies as Advisor A and where Leslie had previously worked since 2003, indirectly owned a 50 percent stake in the credit fund, according to the complaint.

JCAM Global

At that time, Leslie worked at Moore Capital Management, the hedge fund run by billionaire Louis M. Bacon and where Leslie had started JCAM Global in 2003. Leslie spun it out in 2008 when he started his own firm, James Caird, and started liquidating it in 2011 following losses.

Leslie and his firm settled the SEC’s claims without admitting or denying wrongdoing, the agency said. He didn’t respond to a voice message left on his mobile phone, or an e-mail. His office line was dead. Sharron Silvers, a spokeswoman for New York-based Moore Capital, wasn’t able to immediately comment.

JCAM Global was a multistrategy fund, which used range of trading tactics to invest across a variety of asset classes. Investors were able to get their money back on a monthly, quarterly and semi-annual basis. JCAM Credit Opportunities was started in 2008 to invest in assets such as distressed holdings from the global financial crisis, and investors had their money locked up for three years. Leslie and his firm led clients to believe there would be little overlap in trading between the two funds, the SEC said.

‘Highly Profitable’

Along with the main fund, the credit fund invested in shorter-term trades connected with newly issued securities such as share listings and corporate bond sales, according to the SEC. Leslie and his firm routinely allocated at least a third or sometimes all of the “highly profitable” new issues to the credit fund, the agency said. The credit fund typically sold these investments within a few days of buying them and on many occasions sold them the same day, despite being advertised as an entity that was expected to invest in longer-term, distressed assets, the SEC said.

About 60 percent of the credit fund’s gross profits came from newly issued securities, the SEC said. The fund’s due diligence documents for investors had stated that the fund could also make short-term trades.

By August 2009, Leslie determined it was appropriate for any new investments to allocate one-third to the credit fund and the remainder to the main fund. While his firm had five months earlier described the practice to a third party hired to market the credit fund, it didn’t tell investors in the main fund. In January 2010, the allocation became part of the James Caird’s internal policy, and while Leslie and his firm notified current and potential investors of the practice, they didn’t tell them the ratios, the SEC said.

James Caird managed $3.5 billion at its peak, according to the SEC. Leslie currently owns and run a firm called JCAM Investments, which is registered in the U.K.

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