Hedge fund run by ex-UBS broker faces fraud claims

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NEW YORK, Nov 8 (Reuters) A U.S. hedge fund run by a former UBS AG broker that lost 75 percent of its value in a single day of trading now faces fraud claims, according to an arbitration complaint filed by investors.

Investor losses from soured option trades by the Vega Opportunity Fund could approach 0 million, said securities lawyer Andrew Stoltmann, who is representing some investors.

Sample&Cross Capital Management, formed by former UBS employees Matthew Sample and J. David Cross, ran the fund, which suffered heavy losses in August. Operations were based in suburban Chicago.

''It is with great sadness that we are announcing the closing of the Vega Opportunity Fund,'' Sample and Cross wrote to investors in an Aug. 17 letter. ''The recent unprecedented market gyrations in the past month required that we take protective action to stem further losses in our strategy.

A complaint filed late last month with the American Arbitration Association said Sample and Cross marketed the hedge fund's strategy as seeking capital preservation.

The arbitration complaint filed by Stoltmann accuses Sample and Cross of violating the antifraud provisions of Illinois securities law. Sample&Cross Capital Management did not return telephone calls seeking comment.


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