The SEC Wins An Appeal In A UK Court

With the internationalization of the markets, the SEC is increasingly required to seek the assistance of courts and regulators around the globe. This occurs in FCPA cases, as well as insider trading actions and other types of enforcement investigations and cases.

Yesterday, the SEC announced that is prevailed in an action before the Supreme Court of Judicature Court of Appeal in the UK. SEC v. Manterfield, Claim No. HQ08X00798 (High Court of Justice, Queen’s Bench Division, Royal Courts of Justice, Feb. 29, 2008). The court dismissed the appeal of Glenn Manterfield, a UK citizen against whom the SEC had obtained a freeze order regarding assets held in the UK, in the High Court of Justice in London on May 16, 2008.

The SEC commenced the initial action against Lydia Capital, LLC, a registered investment advisor based in Boston, and its two principals, Glenn Manterfield and Evan Anderson of Boston, Massachusetts. SEC v. Lydia Capital, LLC, Civil Action No. 07-10712 (D. Mass. Filed April 12, 2007). The Commission’s complaint claimed that the defendants engaged in a scheme to defraud more than 60 investors who had put over $34 million in Lydia Capital Alternative Investment Fund LP, an unregistered hedge fund managed by Lydia. The SEC’s complaint claimed that the defendants: materially overstated, and in some instances fabricated, the Fund’s performance; invented business partners to try and legitimatize their operations; made untrue statements about Mr. Manterfield’s criminal history; and misstated investors about the nature of the Fund’s assets.

On April 12, 2007, the SEC obtained a temporary restraining order that froze the assets of the defendants. That order was later extended by consent. Subsequently, on February 29, 2008 the Commission filed the UK action to obtain a freeze order over approximately $1 million in assets. That request was initially granted on a temporary basis. Following an evidentiary hearing, the court extended the freeze order until the conclusion of the U.S. enforcement action. Mr. Manterfield appealed from this order. The decision yesterday by the appellate court ended Mr. Manterfield’s appeal of the UK freeze order by dismissing the appeal.