Fund manager charged with $400m fraud

A 28-year-old New York hedge fund manager has been charged with defrauding investors of $400m.

Michael Berger, whose Manhattan Investment Fund bet against internet stocks, pleaded innocent at a brief court hearing and was granted bail of $100,000.

If convicted, he faces a maximum of 15 years in jail and fines of up to $1.25m.

Mr Berger's next stop could be jail

US Attorney Mary Jo White said the fund manager, an Austrian who lives in Manhattan, had pursued a "short-selling" strategy - which resulted in the loss of huge sums of money.

She said he "concealed those losses from investors and potential investors by falsely representing that the hedge fund had positive returns".

'Doctored' accounts

Some 300 investors ploughed $575m into the fund in the five years following its inception in 1995.

The fund, now in bankruptcy, bet that the stocks of internet companies would fall, but instead they rose and rose.

According to prosecutors, Mr Berger hid the losses by falsifying financial records.

He is alleged to have covered up the shortfall by giving false account statements to his accountants and auditors.