The Securities and Futures Commission of Hong Kong has resolved proceedings involving the Descartes Athena Fund SPC, paving the way for about 340 overseas investors allegedly defrauded by the collapsed private hedge fund to recoup part of their investments from the distribution of $191,360,215 of assets recovered by the regulator.

Back in April 2009 the SFC asked the courts to freeze assets of the Athena Fund to protect the interests of its investors, alleging that the fund and its managers had defrauded them by issuing false documents purportedly from a major accounting firm and sending them false statements of account and subscription contracts, and that the assets of the Athena Fund had been dissipated. The court action prevented the assets from disappearing into the perpetrators’ pockets.

The other defendants in the SFC proceedings include the two operators of the Athena Fund and the related companies, namely Descartes Investment Management Limited, Descartes Global Asset Management Limited and Descartes Finance Limited.

After its initial action, the SFC discovered that assets, in the shape of securities, from the Athena Fund had been transferred to NBS Ltd. It then made a further application to the court to freeze assets held by NBS up to the value of these securities.

NBS claimed to be a nominee of Bestmega Limited (Bestmega), an investor in the Athena Fund. NBS and Bestmega contended they were entitled to retain these securities because Bestmega was itself an investor. The SFC disagreed, arguing that these securities were illegally transferred by the Athena Fund to Bestmega and that both NBS and Bestmega were liable to restore the Athena Fund to the original position before the alleged illegal transfer.

Subject to court approval in both Hong Kong and in the Cayman Islands, where the Athena Fund is incorporated, the SFC has reached an agreement with NBS and Bestmega without any finding of illegality or admission by NBS/Bestmega.

Under the agreement, funds in the amount of $191,360,215 will be paid to the Athena Fund for distribution by the court-appointed liquidators to all investors in the Athena Fund and the Descartes Group, including Bestmega/NBS.