The Securities and Exchange Commission recently announced that the U.S. District Court in Chicago has entered an order of permanent injunction against Oakbrook, Illinois resident Patrick G. Rooney (“Rooney”) and his company Solaris Management, LLC . Solaris Management managed various hedge funds including the Solaris Opportunity Fund LP.
The SEC alleged that Rooney and Solaris had changed the investment strategy of its Solaris Opportunity Fund LP (the “Fund”) by concentrating the Fund’s assets in a financially-troubled microcap company, Positron Corp.
The SEC alleges thatnRooney concealed not only the position in Positron but the fact that he had become Positron’s Chairman in 2004. Both Rooney and Solaris Management concealed the Fund’s position in Positron and Rooney’s role as Positron’s Chairman from the Fund’s investors for more than four years.
Rooney finally disclosed the relationship to investors in March 2009; however, the SEC alleged that Rooney falsely represented that the purpose of the investment in Positron was to “safeguard the Fund’s investments.” The SEC determined that “a concentrated, undiversified, and illiquid position in a cash-poor company with a lengthy track record of losses” benefited no one but Rooney himself.
It appears that Rooney and Solaris breached fiduciary obligations owed to the Fund and to investors in the Fund by concentrating the Fund’s assets in Positron and by concealing this investment from the Fund’s investors.
Blau & Malmfeldt invites investors in Solaris Opportunity Fund to contact us at 312-443-1600 for a complimentary case evaluation. Blau & Malmfeldt is a law firm that represents investors across the United States in securities, commodity futures, partnership and shareholder rights disputes.