Over the course of DAG's first fiscal year, Schonberg's allocations of securities purchased in initial public offerings -- especially "hot" IPOs -- had the overall effect of favoring DAG over three other funds Schonberg managed. Neither Dreyfus nor Schonberg disclosed this practice, notwithstanding DAG's prospectus disclosure that investment opportunities would be allocated equitably among Dreyfus funds. Dreyfus also did not review Schonberg's IPO allocations to assess whether their overall effect was to favor DAG over the other funds.
DAG achieved exceptional returns during its first fiscal year in large part because of the investments in IPOs. During the same time, DAG's net asset size increased from $2 million at its inception to more than $154 million eight months later. . For more info visit https://www.sec.gov/litigation/admin/33-7857.htm .