by Calculated Risk on 8/20/2007 04:02:00 PM

From the WSJ: Sentinel Faces SEC Fraud Charges

Chicago money manager Sentinel Management Group Inc., which sought bankruptcy protection Friday after halting redemptions from its $1.5 billion fund, is facing fraud charges from the Securities and Exchange Commission.

The agency is seeking to freeze proceeds that Sentinel gained from selling investment assets to Citadel Investment Group. Further detail on the SEC's action wasn't immediately available.

Sentinel, meanwhile, is seeking approval to distribute to clients the $312 million it garnered from the sales.

In papers filed Monday with the U.S. Bankruptcy Court in Chicago, Sentinel said Bank of New York -- the firm's clearing agent -- was reluctant to distribute the proceeds in light of court rulings Friday barring Sentinel from selling assets owned by three brokerage firm clients.

Sentinel Management filed for Chapter 11 protection Friday after clients began suing the company for selling their assets too cheaply. According to a Wall Street Journal report, Citadel bought the assets for about 80 cents to 90 cents on the dollar.