The former head of an Idaho hedge fund firm pleaded guilty to securities fraud, according to published reports.
The former head of an Idaho hedge fund firm pleaded guilty to securities fraud, according to published reports.
Investors lost at least $88 million when two of the funds collapsed in 2005.
John H. Whittier, majority shareholder and principal executive of Wood River Capital Management LLC, pleaded guilty to securities fraud, failure to disclose beneficial interest of 5% or more in a publicly traded security and failure to disclose a beneficial interest of 10% or more in a publicly traded security at a hearing in federal court in Manhattan yesterday.
Mr. Whittier, a resident of Hailey, Idaho, faces up to 19 ½ years in prison. The sentencing is set for October 15.
Under his plea agreement with the government, Mr. Whittier also agreed to forfeit $5.5 million.
Prosecutors alleged that Mr. Whittier acquired more than 70% of the common stock of San Jose, Calif.-based Endwave Corp. for two of the company's hedge funds and four managed accounts, but didn't disclose those holdings in public filings.
Endwave's stock fell dramatically in summer 2005, which triggered margin calls by certain of the hedge funds' brokers, prosecutors said.
In September 2005, Whittier notified investors that he couldn't pay redemption requests because of liquidity problems.
The funds closed the following month.