On April 25, Stephen Walsh, managing partner and co-founder of WG Trading Co. LP, pled guilty to securities fraud based on his role in a $554 million scheme. He agreed to forfeit approximately $50.7 million and faces up to 20 years in prison. According to court documents, Walsh solicited $7.6 billion in funds from investors with the understanding that it would be invested in an “equity index arbitrage” program that Walsh and his partner, Paul Greenwood, represented was a conservative investment strategy that had outperformed the S&P 500 Index for more than ten years. Walsh and Greenwood misappropriated hundreds of millions of dollars for their own use and to satisfy obligations unrelated to the “equity index arbitrage” trading business. United States v. Greenwood, et al., 09 CR 0722 (S.D.N.Y.) DOJ Press Release
