There has been certainly no dearth of hedge fund related news past month.  Among the news of the complex web of insider trading involving Galleon, we learn of a less high profile but yet still surprising hedge fund related scheme involving Ezra Levy, the CFO/Trader of Boston Provident, stealing over a million dollars from the fund.

According to Reuters, Ezra is being accused of of 11 counts of wire and securities fraud in two schemes to defraud Boston Provident.  Specifically, Ezra is accused of wiring $726,000 to his personal bank account from Boston Provident in monthly installments from January to October this year.  He is also accused of generating a $600,000 profit for himself by having Boston Provident buy shares of Atlas Energy Inc (ATLS.O) and Atlas Energy Resources at inflated prices from an account he controlled.  Boston Provident is run by Orin Kramer, chairman of the New Jersey State Investment Council, which oversees that state’s pension fund.  In a recent statement, Boston Provident said it has fired Levy and intended to seize his partnership assets.   It is claimed that Orin Kramer would personally replace the stolen funds and cover the firm’s legal fees.

In my view, this certainly highlights the importance of ensuring proper money movement controls at hedge fund firms.  The requirement of dual signatories at both the management company level and fund level is but one small step in preventing such types of improper and fraudulent transfers from occurring.