According to the 36-page opinion in , veteran hedge fund executives Peter McConnon and Timothy Lyons met Crombie in early 2010 and were impressed by his proprietary futures trading software, which had purportedly generated annual returns as high as 38 percent in past years. They put up over $1 million and founded Paron with Crombie in June 2010, but not without performing due diligence. They hired Kroll Inc. to dig into Crombie’s background, and when they began marketing Paron’s services, they engaged the national accounting firm Rothstein Kass & Co. to verify Crombie’s track record through third-party brokers. Paron included Rothstein’s verifications in the marketing materials that it sent out to more than 100 client contacts provided by McConnon and Lyons. But by March 2011, the opinion states, the verifications turned out to be worthless, Crombie and his quant-based trading system were revealed as a fraud, and McConnon and Lyons’ credibility with investors suffered a catastrophic blow. Crombie had provided both Rothstein and another accounting firm, Yulish & Associates, with forged account statements; according to McConnon and Lyons, the accounting firms never carried out the independent verifications they were charged with performing. Crombie also never told his partners about at least one previous fraud suit brought against him by an investor. Kroll missed it because it was filed about a week after its background check.

Parsons concluded that Crombie was on the hook for more than $35.5 million in damages, mostly in the form of McConnon and Lyons’ lost future earnings. McConnon, who was a principal of a multibillion-dollar London hedge fund before launching Paron, was granted a $33.7 million share of the award.

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