Regulator fines hedge fund for punishing whistleblower

Blowing Whistle

The Securities and Exchange Commission has sounded a warning to Wall Street and corporate America, taking aim at a hedge fund not only for improper trading - but for punishing the employee who blew the whistle on the wrongdoing.

The New York Times reports that on Monday, Paradigm Capital Management became the first investment fund to pay a fine for retaliating against an employee who reported his firm’s misdeeds to the S.E.C. The hedge fund, which manages $1.5bn of client money, agreed to pay $2.2m to settle the civil charges.

The charges stem from an accusation that Paradigm Capital’s owner, Candace King Weir, conducted improper transactions between Paradigm Capital and C.L. King & Associates, a broker-dealer that she owns, while trading on behalf of a hedge fund client, the S.E.C. said. And after Paradigm Capital learned that its head trader reported the wrongdoing to the S.E.C., the agency said, the firm 'engaged in a series of retaliatory actions', including stripping him of his title, 'that ultimately resulted in the head trader’s resignation'.

'Those who might consider punishing whistle-blowers should realize that such retaliation, in any form, is unacceptable', said Andrew J. Ceresney, director of the S.E.C.’s enforcement division.

To access the complete New York Times article hit the link below:

S.E.C Fines Hedge Fund in Demotion of Whistle-Blowing Employee

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