The firm and its affiliates filed for bankruptcy in March 2011, after several failed attempts at restructuring and facing heavy redemption requests, the SEC said.

Prior to its collapse, the hedge fund managers involved raised some $50 million and netted “lucrative fees,” leaving investors with “nearly worthless holdings,” the SEC said.

The authority alleges that David Bryson and Bart Gutekunst, New Stream's co-owners, “secretly revised the fund’s capital structure” to ease its largest investor, Gottex Fund Management.

The pair then told the firm’s marketing team to continue promoting the hedge fund “as though all investors were on the same footing.” Gottex actually had priority over other investors in the event of the fund’s liquidation, the SEC said.

Tara Bryson and Richard Pereira, New Stream’s former chief financial officer and head of investor relations respectively, have been charged by the SEC. Tara Bryson, who is David Bryson’s sister, agreed to settle the SEC’s charges, subject to court approval. She agreed to be permanently barred from the securities industry.

The firm’s Cayman Islands affiliate was also charged in the scheme.