On December 1, 2010, the SEC instituted and simultaneously settled fraud charges against an individual hedge fund manager based in San Francisco.  (This matter is further evidence of reinvigorated enforcement efforts by the SEC's San Francisco office.  For a discussion of another matter recently initiated by that office, see "SEC Commences Civil Insider Trading Action Against Deloitte Mergers and Acquisitions Partner and Spouse Who Allegedly Tipped Off Relatives to Impending Acquisitions of Seven Public Companies," Hedge Fund Law Report, Vol. 3, No. 48 (Dec. 10, 2010).)  The allegations in the SEC's Order tell a familiar story: a young manager raises, at peak, $30 million; while the Order does not specify, the money likely came from friends and family.  The manager experiences losses in a relatively conservative investment strategy.  The manager, presumably embarrassed, tells his investors that everything is fine, while trying to make up those losses by taking on slightly more risk.  But instead, the manager loses more money, and his misrepresentations to investors depart to a greater extent from the facts.  Eventually, the manager comes clean, the fund is liquidated and the manager is charged by the SEC with civil fraud.  What is noteworthy about this matter are two statements in the SEC's order.