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The Securities and Exchange Commission hit Angelo Haligiannis and his Sterling Watters Group hedge fund with an emergency enforcement action for lying to investors about performance, complete with false documents, prospectuses and marketing materials. The fund's general partners, Sterling Watters Capital Advisors and Sterling Watters Capital Management, were also named as defendants.

"Since 1996," the SEC said in a release, "Haligiannis has raised at least $27 million in the fund by grossly misrepresenting the fund's performance to investors and potential investors [with] phony account statements that recorded fictitious quarterly and annual investment gains and account balances." Despite all these claims of success, the SEC said the firm was performing worse than it reported.

"In fact, the fund's brokerage records show that the fund has lost money over the years and is now essentially worthless," the Commission said, citing the hedge fund for violating the Securities Act of 1933, the Securities Act of 1934, as well as the Investment Advisers Act of 1940.

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