The Securities and Exchange Commission has dropped a civil fraud case it filed in March of last year against investment firm Global Crown, sister company J&C Global Securities and two of its executives, Rani Jarkas and Antoine Chaya, for allegedly exaggerating performance of a hedge fund they ran, Cogent Capital Management, in order to hide losses.

The company argued that it set aside a $228,000 reserve as an accounting decision, and not to offset investors’ losses.

The SEC said it made the decision to drop the case in light of the division of enforcement’s recommendation that it do so last October following the June 2006 Goldstein v. SEC decision that prevented the Commission from requiring hedge funds with 15 or more clients to register and share their financial records

Increasingly, hedge funds are becoming successful at avoiding government oversight.

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