THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, October 1, 1996 TAG: 9610010260
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
DATELINE: NORFOLK LENGTH: 56 lines
Two years after settling similar charges out of court, federal regulators alleged Monday in U.S. District Court that a Norfolk money-management firm and its chief executive violated securities laws by issuing false and misleading statements to its clients.
In its complaint, the Securities and Exchange Commission contended that Seaboard Investments Advisers Inc. and president and CEO Eugene W. Hansen distributed fraudulent statements regarding the firm's investment performance. The SEC asked the court to restrain Seaboard and Hansen from similar actions and to impose unspecified civil penalties.
Hansen, Seaboard's founder and majority owner, said late Monday that he would fight the SEC's allegations. Hansen, who organized Seaboard in 1984, said he had received a one-page statement from the SEC and had not yet seen a copy of the commission's complaint.
Seaboard and Hansen have 20 days to file a response.
In an administrative order issued in October 1993, the SEC alleged that Seaboard, Hansen and another Seaboard officer had distributed misleading investment performance figures from 1984 to 1991 by using hypothetical data for certain accounts.
``These practices generally resulted in the advertisement of significantly better performance figures than Seaboard's actual performance for the periods claimed,'' the commission said in the complaint filed Monday.
The SEC also had contended in the 1993 complaint that Seaboard broke federal laws by failing to maintain and preserve records demonstrating its investment performance.
Hansen and the other Seaboard officer, who later left the company,signed an administrative agreement in August 1994 without admitting or denying any of the SEC's allegations.
The agreement called for payment of a $1 million fine and several changes in Seaboard's operations, including audits of the firm's investment performance by an outside firm and changing the way it maintained its books.
Hansen said Monday that Seaboard paid the last installment of the fine earlier this year and had remedied the record-keeping problems criticized by the SEC.
In the complaint filed Monday, the SEC alleged that Seaboard and Hansen issued letters to clients in 1995 that fraudulently misstated the company's investment performance.
``The advertisements were designed to portray Seaboard as a superior investment adviser by representing that its accounts had outperformed certain widely recognized market indices,'' the complaint said.
By doing so, Seaboard and Hansen violated the terms of the SEC's August 1994 order and anti-fraud provisions of the Investment Advisers Act of 1940, the SEC complaint said.
Hansen, the complaint said, used the misleading reports in an effort to hold onto remaining clients after several had departed. At its peak in the early 1990s, Seaboard managed more than $1 billion. Hansen estimated Monday that the firm is managing $150 million for about 200 clients.
KEYWORDS: FRAUD SEC by CNB