Hedge Fund Manager Ordered to Cease-and-Desist, Censured and Fined for Marking the Close

Respondent was the owner and manager of a registered investment adviser, Clarus Capital Management, LLC, and also the general partner of Clarus Capital, LLC, an unregistered hedge fund. The SEC found that he assisted in marking the close of the stock of Hawk Corporation, at the apparent behest of a Hawk executive. The executive allegedly called respondent on June 30, 2006 and told him that Hawk could avoid SOX compliance by year-end if the stock below the $12.30 trigger price that day, after which respondent submitted eight limit day orders on behalf of Clarus to sell a total of 40,000 shares of Hawk at $12.29. The average daily trading volume for Hawk was 11,371 shares a day.