SEC Gets Order Freezing Petters Settlement Money

WASHINGTON (AP) -- Federal regulators have won a court order against a hedge fund manager they accuse of funneling hundreds of millions of dollars from investors in his funds to the $3.7 billion Ponzi scheme run by convicted Minnesota businessman and St. Cloud native Tom Petters.

The Securities and Exchange Commission announced the order by a federal judge in Minneapolis against Connecticut fund manager Marlon Quan. The order issued Friday freezes about $14 million that Quan was to get from a court-appointed receiver in the Petters case to settle claims against Petters by investors in Quan's funds.

The SEC filed civil charges against Quan for allegedly aiding the Petters fraud. The agency says Quan negotiated an agreement with the receiver to "divert" the Petters settlement funds to himself and others instead of to the swindled investors.