SEC accuses Tenet convertible fund of concealing losses

By Jennifer Chiou

New York, June 27 - The Securities and Exchange Commission filed Wednesday an emergency enforcement action alleging that Tenet Capital Partners Convertible Opportunities Fund, LP has continued to conceal large losses from investors and is now seeking to pay out an inflated $3 million redemption request to cover up the alleged fraud.

Investment adviser Tenet Asset Management, LLC and principal Jon E. Hankins are also named in the complaint.

As a result of its court action, the SEC obtained a temporary restraining order Wednesday, which includes naming a temporary receiver over Tenet and the fund.

The complaint specifically claims that Hankins and Tenet, in an effort to raise new capital, have made false statements and provided inaccurate marketing materials to Capital Opportunities Fund investors as well as Tenet Offshore Capital Partners Ltd. investors.

In particular, while marketing materials note that the Convertible Opportunities fund had a gain of more than 32% during April to December 2004, the fund's audited financial statements for that period showed a 24% loss, the SEC said in a news release.

The complaint additionally claimed that Hankins distributed to at least one investor an altered audited financial statement for 2004 that allegedly hid a reported $1.4 million net loss for the year and falsely listed that the fund had net assets of $31.2 million when it reported only $4.2 million.

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