For Release: December 18, 2008
New York Federal Court Orders Hedge Fund Linuxor Asset Management LLC, and its Principal Abbas A. Shah to Pay a $200,000 Civil Penalty in CFTC Anti-Fraud Action
Defendants Permanently Banned from Trading Commodities
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that it obtained a $200,000 civil penalty and a permanent commodities trading ban against hedge fund/commodity pool operator Linuxor Asset Management LLC. (LAM) and its principal Abbas A. Shah, both based in New York City.
The consent order of permanent injunction, entered on December 17, 2008, by U.S. District Judge Lewis A. Kaplan of the Southern District of New York, stems from a complaint filed by the CFTC on September 19, 2005 charging Shah and LAM with defrauding fund participants in the Linuxor Global Macro Fund (see CFTC News Release 5115-05, September 20, 2005). Shah managed the hedge fund, served as its principal, and acted as its trading advisor.
Specifically, the order finds that Shah and Linuxor committed fraud by misrepresenting the value of the Linuxor Global Macro Fund. In one instance, Shah sent an email that materially misrepresented the net asset value of the fund by approximately $4 million, and another email falsely claimed success in recovering prior substantial losses.
The order also finds that the defendants failed to send to fund participants required quarterly statements for 2002 to 2004 and a timely annual report for 2002. The defendants also commingled participants’ funds with the property of others, in violation of CFTC regulations.
The CFTC acknowledges the assistance of the National Futures Association in this action.
The following Division of Enforcement staff members are responsible for this case: Michael R. Berlowitz, W. Derek Shakabpa, Judith Slowly, David Acevedo, Lenel Hickson, Jr., Stephen J. Obie, Richard B. Wagner, and Vincent A. McGonagle.
R. David Gary
Last Updated: December 18, 2008