A pair of prominent European hedge funds mixed up in the mutual fund scandals here have left the European community vulnerable to The Securities and Exchange Commission, Financial News reported.

British hedge fund providers Headstart Advisors and Pentagon Asset Management, along with five domestic alternative investment firms, were charged by the SEC with participating in a scheme to plunder $1.4 billion from at least 50 American mutual fund companies between June 2001 and Sept. 2003. The charges stem from an American branch office of Prudential Securities in which five brokers allegedly conducted improper trading activities under phony pseudonyms to avoid detection from compliance officers.

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