SEC freezes assets of hedge fund manager

Plus Money and its principal allegedly raised $30 million from approximately 300 investors.
MAY 05, 2008
The Securities and Exchange Commission has frozen the assets of a group of hedge funds run by Plus Money Inc., an investment manager in El Cajon, Calif. The SEC's complaint alleges that since at least May 2004, Plus Money and its principal, Matthew La Madrid, managed hedge funds known as the Premium Return Funds and raised more than $30 million from approximately 300 investors by telling them the funds would engage in a covered call options trading strategy. A covered call is an options strategy where an investor holds a long position in an asset and sells call options in an attempt to generate increased income from the asset. According to the complaint, filed in the U.S. District Court for the Southern District of California, Plus Money and Mr. La Madrid allegedly abandoned the covered-call trading strategy in the fall of 2007, emptied the money out of the Premium Return Funds’ brokerage accounts, and hid the money through a series of illicit transfers. The complaint also found that Plus Money failed to make monthly payments to the Premium Return Funds investors beginning in February. A hearing on whether a preliminary injunction should be issued against the defendants is scheduled for May 14.

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