The Canadian Press - ONLINE EDITION

Hedge fund Paradigm Capital, owner Weir paying $2.2M to settle SEC conflict, retaliation case

  • Print

WASHINGTON - A hedge fund and its owner will pay $2.2 million to settle federal charges that the firm set up trades that represented a conflict of interest and then retaliated against a high-ranking employee who reported the conduct to regulators.

The Securities and Exchange Commission announced the settlement Monday with Paradigm Capital Management of Albany, New York, and its owner, Candace King Weir. The SEC said it's the agency's first case to protect a whistleblower under the new anti-retaliation authority granted by the 2010 financial overhaul law.

The conflict arose because Weir initiated transactions between Paradigm and a brokerage firm she also owns while trading on a hedge fund client's behalf, the SEC said.

That type of arrangement can create a conflict between the interests of a hedge fund's manager and those of a client, the agency said. Hedge fund managers are required by law to disclose in writing that they are taking positions on both sides of a trade and to obtain the client's consent before completing each transaction.

Paradigm and Weir neither admitted nor denied the SEC's allegations but agreed to refrain from future violations. Under the settlement, they are returning $1.7 million plus $181,771 to investors in Paradigm and a $300,000 civil penalty.

In addition, Paradigm agreed to hire an independent compliance consultant.

"We are pleased to resolve this matter and have it behind us," Paradigm and Weir said in a statement.

The whistleblower, who was the head trader at Paradigm starting in 2009, resigned in August 2012. After learning that he had reported possible violations to the SEC, the firm retaliated by demoting him to compliance assistant, stripping him of his supervisory duties, and assigning him to investigate the same conduct he had reported, the agency said. The SEC didn't identify the whistleblower.

The head trader at Paradigm during that period was James Nordgaard, who sued Paradigm in federal court in 2012 for illegally retaliating against him, court records show. Nordgaard's lawsuit alleged that his career as a head trader "came to an abrupt end" after he told Paradigm and Weir that he had reported what he believed to be illegal activities to the SEC.

Weir also operates a private non-profit foundation in Albany that reported $20 million in assets and gave nearly $1 million in 2012 to more than 100 groups, including $504,000 to the Museum of Modern Art in Manhattan.

__

Associated Press writer Michael Virtanen in Albany contributed to this report.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Weather for final Fringing weekend

View more like this

Photo Store Gallery

  • Goslings enjoy Fridays warm weather to soak up some sun and gobble some grass on Heckla Ave in Winnipeg Friday afternoon- See Bryksa’s 30 DAY goose challenge - May 18, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • Someone or thing is taking advantage of the inactivity at Kapyong Barracks,hundreds of Canada Geese-See Joe Bryksa’s goose a day for 30 days challenge- Day 15- May 22, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

Should Winnipeg control growth to deal with climate change?

View Results

Ads by Google