Wood Rivers Partners LP Founder John Whittier has been ordered to serve 36 months in federal prison. The former hedge fund manager pled guilty to charges that he defrauded investors of about $88 million over a two-year-period.
Whittier admitted to deceiving investor clients and making them think that he would keep risks low while he employed diverse investment strategies. Prosecutors also say that Whittier lied when he told investors that the hedge fund they had invested in was being audited.
Instead, Whittier placed about 80% of the assets in his Wood River US hedge fund portfolio, worth $127 million, into one stock, called Endwave. In doing so, he was in breach of his investors’ trust.
Whittier had promised investors that no more than 10% of the fund’s assets would be placed in one holding. He also neglected to file mandatory beneficial ownership filings with the Securities and Exchange Commission that would have revealed his concentrated holdings.
Endwave’s stock price eventually dropped and Wittier could not meet shareholders’ redemption requests or fulfill certain margin calls. The hedge fund shut down in October 2005.
Whittier was also told to forfeit $5.5 million. He is scheduled to begin serving his sentence on January 15, 2008.
If you are an investor who is a victim of securities fraud, do not hesitate to contact Shepherd Smith and Edwards today. We are committed to helping investors recover their losses. We represent investors across the United States.
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Related Web Resources:
Ex-hedge fund manager sentenced in NYC, CNN.com, October 15, 2007
Hedge Fund Manager Sentenced to 3 Years in Prison for $88 Million Securities Fraud Scheme, Media Newswire.com
Meet John Whittier, Wood River Founder, BusinessWeek, October 21, 2005