Hedge Fund Manager May Face SEC Penalties

Charles Harris, a former hedge fund manager fined almost $13.9 million and sentenced to 14 years in prison last week, may face penalties for fraud, the Securities and Exchange Commission said Thursday.

Harris, of Winnetka, Ill., was sentenced Oct. 6 for lying to investors about the performance of Tradewinds International II. The SEC said Thursday that Harris misrepresented the funds’ value and rate of return. About 25% of the $10 million he raised to invest for clients in 2003 and 2004 was used “for Harris’ personal and business expenses,” the regulator said.

The hedge fund manager sent e-mails and a DVD to some investors in July 2004, confessing that he had lied about the 12% annual returns in Tradewinds II, the SEC said. At the time, he also said he had fled the country and taken the investors’ assets offshore.