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# Other

# SEC v. Howard Brett Berger, et al. Case No. 12-cv-04728-LDW-ARL (E.D.N.Y.)

                            Oct. 11, 2022                       

On September 21, 2012, the SEC filed a complaint against defendant Howard Brett Berger (“Berger”) and his wife, Michelle Berger, as a relief defendant (collectively the “Bergers”). The complaint alleged that no later than July 2008 through approximately early March 2010, Berger engaged in a fraudulent trade allocation scheme commonly referred to as “cherry picking.” Berger utilized a direct-access trading platform to delay final allocation of the trades until the end of the trading day, frequently after the market closed, so he could determine whether the trades were profitable. Berger managed two hedge funds, Professional Traders Fund, LLC (“PTF”) and Professional Offshore Opportunity Fund (“POOF”) (collectively, the “Funds”). Oftentimes, Berger cherry picked profitable trades from PTF and allocated those trades to his wife’s brokerage account, and allocated unprofitable trades to POOF. As a result, Berger received at least $6.8 million in profits and avoided losses in his wife’s account, and created tremendous losses to investors by passing on millions of dollars in losses to the Funds he managed. See* *Complaint.

On January 15, 2013, pursuant to their consent and without admitting or denying the allegations against them, the Court entered a final judgment against the Bergers. The final judgment permanently enjoined Berger from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The final judgment found the Bergers were jointly and severally liable to pay $5,399,456.16 in disgorgement and Berger was found liable for an additional $1,506,297.84, comprised of disgorgement, prejudgment interest, and a civil money penalty. The Bergers timely paid a total of $5,399,456.16 of disgorgement (the “Distribution Fund”). See Final Judgment.

On November 8, 2013, the Court appointed Damasco & Associates LLP as the Tax Administrator to fulfill the tax obligations of the Distribution Fund.

On April 9, 2014, the Court appointed Simon Consulting, LLP as the Distribution Agent to oversee the distribution of the Distribution Fund to injured investors. See Order to Appoint a Distribution Agent.

On August 19, 2015, the SEC filed a motion to approve a proposed distribution plan, together with a proposed plan of distribution (“Distribution Plan”). See Motion for Order Approving Proposed Distribution Plan. See also Proposed Distribution Plan.

On August 27, 2015, the Court approved the Distribution Plan. See* *Order Approving Proposed Distribution Plan.

The Distribution Plan provides that the Distribution Fund will be allocated according to the losses incurred by investors in POOR and/or PTF on a pro rata basis pursuant to the number of shares held by each eligible investor. The Distribution Agent identified 36 POOF injured investors and 10 PTF injured investors that deemed to be eligible investors under the terms of the Distribution Plan.

On December 16, 2015, the SEC filed a motion to distribute $5,367,140.21, less court registry fees. See Motion for Distribution. On January 6, 2016, the Court granted the SEC’s motion and entered an order to distribute $5,367,140.21, less court registry fees. See Order for Distribution.

Additional funds were paid by Berger in accordance with a stipulation of settlement to make payments to satisfy the remaining outstanding balance owed and future payments are expected to be received. In accordance with paragraph 32 of the Distribution Plan, further distributions to eligible investors will be sought.

On November 4, 2016, the SEC filed a motion to distribute $687,357.86 from the Distribution Fund for a second disbursement to eligible investors. See Motion for Distribution. On November 8, 2016, the Court granted the SEC's motion and entered an order to distribute $687,357.86 from the Distribution Fund to eligible investors in accordance with the terms of the Distribution Plan. See Order for Distribution.

After receipt of an additional $788,760.84 from Berger, the Commission filed a motion on January 3, 2018 to distribute $795,743.93 from the Distribution Fund as a third disbursement.  *See* the Commission’s Motion. On January 9, 2018, the Court granted the Commission's motion and entered an order to distribute $795,743.93 from the Distribution Fund to eligible investors in accordance with the terms of the Distribution Plan. See Order for Distribution.

For more information, please contact the Distribution Agent:

Simon Consulting, LLP, Peter S. DavisTelephone Number: 602-279-7500Website: www.simonconsulting.netEmail: pdavis@simonconsulting.net

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