What the SEC found

• Hatteras Investment Partners and Perkins breached their fiduciary duty during an attempted liquidation of five registered funds, according to the SEC.
• After the funds rejected two conventional liquidation proposals carrying an estimated 20% discount, Hatteras pursued a Beneficient deal valued at the funds’ full net asset value.
• The record identified repeated warnings, including heavy goodwill, operating losses, disclosed offering risks, an SEC investigation and opposition from Hatteras’s fractional chief financial officer.
• Beneficient’s stock fell more than 40% on its first trading day while the funds’ shares were unexpectedly locked up. The SEC attributed approximately $300 million in fund losses to the transaction.
• Three years after Beneficient went public, the funds were still in a plan of liquidation because ownership transfers of underlying assets had not been completed.
• Both respondents were censured and ordered to cease and desist. Perkins agreed to pay a $250,000 civil penalty.

The proposed solution did not eliminate the costs and delays of selling illiquid assets. It replaced them with risks Hatteras had not adequately investigated or understood.

The attraction was easy to see. Hatteras-managed funds were packed with private and alternative investments that could not be sold quickly. Shareholders wanted out, and traditional brokers warned that a liquidation could take nearly a year and erase roughly one-fifth of the funds’ net asset value.

Beneficient offered a route that appeared to avoid both problems. Instead of selling the portfolio at a discount, the Master Fund would exchange its assets for preferred shares valued at full net asset value. Those shares were expected to become publicly traded stock, which could then be sold for cash.

According to the SEC, that promise rested on assumptions Hatteras had not adequately tested. Perkins proceeded despite financial red flags, misunderstood whether the shares could be sold after the public listing and failed to account for the legal ownership transfers required to close the funds.

A liquidity crisis created pressure for a better exit

Hatteras managed the Hatteras Master Fund and four feeder funds. Investors placed money into the feeder funds, which in turn invested through the Master Fund in private and hedged portfolio funds. The structure gave investors diversified exposure to alternative assets, but it also made their money difficult to retrieve.

The prospectuses warned that fund units were illiquid. Historically, the board approved quarterly tender offers capped at 5% of each fund’s net asset value. As performance plateaued and redemption demand rose, that limited exit became inadequate. Assets under management fell from approximately $1.5 billion in 2014 to less than $400 million in 2020, while tender requests climbed above 50% of net asset value.

In December 2019, Perkins presented two proposals from established secondary brokers. Each estimated a loss of about 20% and a process lasting nearly a year. The board understood those terms were common for a liquidation of this size, according to the order, but rejected the proposals and asked Hatteras to keep looking.

How the full-value proposal was supposed to work

Conceptual summary based on the transaction described in the SEC order. It does not represent measured cash flows.

The deal also contemplated an ongoing commercial relationship. Beneficient agreed that Hatteras would continue managing the transferred portfolio funds and would contribute assets to seed new Hatteras-managed funds. The SEC order reports these terms but does not find that they motivated Perkins’s recommendation.

The central problem was that a valuation at full net asset value was not the same as cash. Recovering that stated value depended on Beneficient reaching the public market, the converted shares being saleable and the market sustaining their price.

The warnings were not buried

“not a CPA, not a CFA, not a financial analyst”Perkins describing his own limitations before asking Hatteras’s fractional CFO to examine Beneficient’s finances, as quoted in the SEC order

The CFO’s review did not end the transaction. Nor did Hatteras bring in a broader due diligence team. Outside counsel advised on the structure and investment-company law, but the SEC found that Perkins conducted Hatteras’s review of Beneficient almost entirely by himself.

At the December 7, 2021 board meeting, Perkins said Hatteras had completed thorough due diligence and concluded the proposal was in shareholders’ best interests. He presented it as a quick and efficient way to liquidate the funds. The board unanimously approved the plan.

The SEC later found that neither Hatteras nor Perkins had a reasonable basis for those conclusions. Its order says they failed to understand the transaction’s terms, adequately review the offering documents or conduct additional work after the CFO raised concerns.

Two misunderstandings broke the liquidation plan

The shares could not be sold when expected

Perkins had negotiated for the preferred shares to be free of contractual lockup restrictions. He incorrectly believed that meant they would also avoid a regulatory lockup. When Beneficient completed its public-market transaction with a special purpose acquisition company in June 2023, the Master Fund’s converted common shares were subject to a three-month regulatory restriction.

Beneficient’s stock fell more than 40% on its first trading day. The funds could not sell during that initial decline. Over the following months, the share price continued to collapse and Beneficient wrote down goodwill by more than $2 billion. The SEC found that the transaction produced approximately $300 million in losses for the registered funds.

Economic rights moved, but ownership did not

The second failure was structural. Transferring legal ownership of the underlying portfolio funds required approvals that had not been obtained. The agreement allowed Beneficient to receive the economic interests associated with those assets while the Master Fund remained their legal owner.

That shortcut avoided an arduous transfer process, but it also prevented the Master Fund from deregistering and terminating. According to the September 2026 order, all five Core Funds remained in a plan of liquidation three years after Beneficient’s public listing.

The sequence from warning to loss

What the settlement orders, and what it does not

The SEC found that Hatteras and Perkins willfully violated Section 206(2) of the Investment Advisers Act, which prohibits an investment adviser from engaging in a practice that operates as a fraud or deceit on a client. A violation under this section can rest on negligence and does not require proof of intent to defraud.

In this legal context, the order explains that “willfully” means the person knew what he was doing. It does not require proof that he knew the conduct violated securities law.

The $250,000 penalty and the approximately $300 million fund loss measure different things. One is a personal regulatory sanction. The other is the SEC’s estimate of damage to the registered funds. The order does not quantify individual shareholder losses, current recoveries or distributions made during the liquidation process.

The order also notes that Hatteras and Perkins had no prior disciplinary history. It contains no detailed defense from them beyond the settlement’s non-admission language, and it does not provide Beneficient’s response to the findings.

What remains unresolved in the supplied record

• How much money individual shareholders ultimately recovered
• Whether all underlying portfolio interests have since been transferred
• When the five registered funds will complete liquidation and terminate
• Whether any separate investor action will produce compensation

A costly substitution of risks

The conventional proposals gave the board an unattractive but legible choice: accept an estimated 20% discount and wait nearly a year. Beneficient appeared to offer full value and a cleaner exit. The SEC’s findings show that the apparent advantage depended on a chain of unresolved conditions, including Beneficient’s financial health, a successful public listing, immediate market access and completed ownership transfers.

The transaction did not make the liquidity problem disappear. It traded a known discount for risks that Hatteras had not adequately examined, even after the firm’s own financial adviser warned against proceeding. Shareholders were left exposed not only to a collapsing public stock, but also to funds that still could not finish closing.