US District Judge Kenneth Marra for the Southern District of Florida found that Lauer, head of Lancer Management Group and Lancer Management Group II, must pay more than USD43.6m to deprive him of his ill-gotten gains, and more than USD18.9m in prejudgment interest.

"This is a victory for investors and a cautionary tale for hedge fund managers who line their pockets with ill-gotten gains," says David Nelson, director of the SEC's Miami regional office. "We are pleased the court agreed that the fraudulent conduct warranted this judgment."

According to the SEC's complaint in the case, Lauer raised more than USD1.1bn from investors over several years by misrepresenting the nature of and returns on his investments, and caused investors to lose approximately USD500m of that amount.

The judge's order also gives the SEC 30 days to recommend a specific penalty amount that Lauer should pay in addition to disgorgement of his ill-gotten gains. Lauer has been criminally indicted in the Southern District of Florida for the same conduct underlying the SEC's action. His trial is currently scheduled for March 2010.