On November 8, 2012, the SEC filed a Complaint in federal district court charging a hedge fund manager and its owner with engaging in impermissible cross trades, inflating values of securities in fund portfolios and misleading investors in an attempt to disguise trading losses suffered by its hedge funds incurred from investments in risky tranches of a collateralized debt obligation.  This article summarizes the allegations, claims and relief sought by the SEC.  For more on the law governing cross trades by hedge fund managers, see “Trading Practices Session at SEC’s Compliance Outreach Program National Seminar Addresses Need for Holistic Compliance Procedures Dealing with Allocations, Best Execution and Cross Trades,” Hedge Fund Law Report, Vol. 5, No. 8 (Feb. 23, 2012).