Regulators discover $100 million hedge fund fraud in three years

U.S. federal prosecutors accused three senior executives of Ostin Capital Management of securities fraud, involving $100 million in falsification of hedge fund performance and market manipulation. The indictment alleges that the company used retrospective transactions and false assets to falsely report an annual return of 20%, which were discovered in the Securities and Exchange Commission audit. The U.S. Department of Justice is filing a criminal lawsuit that can be sentenced to up to 20 years in prison. Institutional investors, including a Midwest pension fund that claimed to have lost $15 million, are seeking to freeze assets. The SEC and FINRA have launched a parallel investigation into the company's behavior.