Back to all announcements

Bayou executives face ban

Two former executives of the now collapsed Bayou hedge fund have been banned by the US Securities and Exchange Commission (SEC) from operating in the securities industry, according to a SEC statement.

The ban, which is for an indefinite period, prevents Bayou founder Samuel Israel or chief financial officer Daniel Marino from associating with other brokers, dealers or investment advisors.

The collapse of the Bayou hedge fund in 2005 lost investors an estimated $450 million through flawed investment strategies, and the hedge fund managers have been accused of lying about profits in order to keep new money coming in.

Mr Israel is then reported to have told investors at the time that he was dealing with personal problems and would be closing the fund, returning money to investors.

However, when checks to investors began to bounce, the fraud was discovered.

Bayou's spectacular demise dealt a confidence blow to the hedge fund industry, which had until then been riding on a wave of investor enthusiasm over the high returns the fund was providing on their investments.