The Securities and Exchange Commission has filed a civil injunction action against Patrick Rooney of Oakbrook, Illinois, and his company Solaris Management, over fraudulent misuse of assets in a fund run by the firm, hedgeweek reports.

Solaris Management is the investment advisor to the Solaris Opportunity Fund, which is a non-directional hedge fund which had some 30 investors and assets of over $16 million as of December 2008, according to the report.

Rooney and Solaris Management reportedly made a drastic change in the fund’s investment strategy to become wholly invested in a firm called Positron, a microcap company of which Rooney had been chair since 2004, and which was in financial difficulty. They reportedly did so without informing investors.

Rooney had been receiving financial compensation from Positron and allegedly misused the fund’s assets to invest in the firm, according to the report. Some of these investments allegedly included loans with 0 per cent interest.

Meanwhile, Rooney did not let investors know about the investments or his relationship with Positron until March 2009, and even then misled investors to believe he had become the chairman to safeguard the fund’s investment, the SEC’s complaint reportedly says.

The complaint was filed in the United States District Court for the Northern District of Illinois, and the Commission is seeking permanent injunctions, disgorgement of any ill-gotten gains plus prejudgment interest and civil monetary penalties against Rooney and Solaris Management, and an officer and director bar against Rooney.