Authorities have expanded their investigation of hedge fund NIR Group, looking into whether the firm paid kickbacks to people in exchange for helping it inflate the value of some of its investments.
According to The Wall Street Journal, officials are questioning individuals close to the firm about the alleged kickback scheme. NIR has been the subject of a federal probe since last year, and has been sued at least twice, accused of misleading investors about its performance.
The criminal probe is focusing on whether NIR officials—including founder Corey Ribotsky—overvalued some convertible bonds, which it often receives in exchange for investing in small public companies. Investigators are also looking into whether the hedge fund improperly disclosed some of its investments.
NIR froze redemptions at the end of 2008 as it ran into trouble valuing some of its investments. Investors in its largest fund still have not received an audit for that year, despite claims last year from NIR that the audit was forthcoming soon. FTI Consulting, which NIR hired last year to advise it, quit earlier this year.
Authorities are trying to determine whether NIR sought to boost the value of its investments by offering kickbacks to outside individuals in exchange for those individuals buying assets at inflated prices. Neither NIR nor Ribotsky have been charged with any wrongdoing.