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The Securities and Exchange Commission charged ICP Asset Management Monday with manipulating derivative deals to profit at the expense of investors.
An SEC lawsuit charges the company with a breach of investor trust.
The firm was hired by banks to oversee complex collateralized debt obligations, which are securities that derive their value from fixed-income assets. But the SEC said the company made a profit from the deals it was supposed to look after in a neutral fashion, The New York Times reported.
For example, ICP allegedly purchased bonds from struggling Bear Stearns in 2007 for $1.3 billion on behalf of the collateralized debt obligations it was managing with an agreement it would pay for the bonds at a later date. However, the SEC said, ICP sold the bonds to another fund it was managing for a $14 million profit, all without asking permission from American International Group, which had insured the CDOs.
One of ICP’s principals, Thomas Priore, said the firm “at all times acted in the best interest of our clients.”
Priore, who was named in the suit, said the firm would “vigorously defend” itself against the allegations.