A federal judge has declined to dismiss claims that Banc of America Securities aided and abetted a fraudulent scheme that ultimately led to the high-profile collapse of defunct hedge fund Beacon Hill Master Fund.

Liquidators for the hedge fund alleged that its investment manager and principals reported fraudulently inflated net asset values that ultimately led to the fund’s 2002 demise. The liquidators accused Banc of America Securities of aiding and abetting the scheme by providing to auditors false values for individual securities in the fund’s portfolios at the investment manager’s request.

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