Former hedge fund trader gets 40 months in prison for tricking investors by overvaluing assets

Reuters

• Jeremy Shor, a former trader at shuttered hedge fund Premium Point Investments, was sentenced to 40 months in prison on Monday, Bloomberg reported.
• Shor was convicted in July for conspiring with the fund's co-founder to inflate the value of the firm's assets in order to win over new investors and keep existing clients.
• Premium Point co-founder Anilesh "Neil" Ahuja - who was also found guilty in July - is scheduled for sentencing next week, according to Bloomberg.
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A former hedge fund trader was sentenced to spend 40 months in prison for working with the firm's co-founder to trick investors by overvaluing assets.

Jeremy Shor, a previous employee of shuttered fund Premium Point Investments, was given the sentence by U.S. District Judge Katherine Polk Failla on Monday, Bloomberg reported.

Shor and Premium Point co-founder Anilesh "Neil" Ahuja were both convicted in July for "mismarking" the value of the firm's assets in an attempt to win over new investors and retain existing clients. Ahuja is expected to face sentencing next week, according to Bloomberg.

Ahuja and one of the fund's portfolio managers, Amin Majidi, artificially boosted monthly return targets by directing Shor and other traders to alter valuations to meet those figures, according to court filings. The goal, according to the prosecutors, was to bolster the fund's performance so they could charge clients higher fees.

According to Bloomberg, the prosecutors said Shor played an "instrumental role" in the scheme. Shor told the judge that he should have said something about the valuations and that not doing so "has left me with an indescribable pain and sense of failure I will feel for the rest of my life," Bloomberg reported.

"I think that Mr. Shor saw the cesspool pretty quickly and jumped right in," the judge said, according to Bloomberg.

Monday's sentencing is part of a broader push by the federal prosecutors to crack down on individuals and investment firms inflating the value of assets.

Premium Point was founded in 2008 by Ahuja and focused on structured credit products, according to court filings. The fund began winding down in 2016 and said in 2017 that the Securities and Exchange Commission was investigating its valuations, according to Bloomberg.