CHICAGO (Bloomberg) — Lake Shore Asset Management, the Bermuda-registered Chicago hedge fund firm, failed to persuade a US judge to delay her order blocking it from engaging in commodity futures and option trading while regulators examine its books.

US District Judge Blanche Manning in Chicago, who froze Lake Shore's operations in an August 28 order citing her concern for the firm's investors, last rejected an emergency request to put on hold enforcement of the decree during an appeal.

"Time is of the essence in examining Lake Shore Limited's records while they still (hopefully) exist to be examined," Manning said in a 12-page ruling issued after the hearing.

Lake Shore filed its appeal last week. The firm has told the court it manages more than $1.05 billion in assets, mostly outside the US. Former Chicago Mercantile Exchange Chairman Laurence Rosenberg is one of Lake Shore's principals.

In her ruling, Manning cited a US Commodity Futures Trading Commission filing she received, indicating that Lake Shore was dismantling its London office without prior notice to its landlord there.

"Lake Shore Limited has responded with unsupported speculation that is at odds with the evidence in the record," the judge wrote.

Lake Shore spokesman Drew Mauck declined to comment on Manning's ruling. CFTC spokesman Dennis Holden said he couldn't comment on pending litigation.

The CFTC has accused the firm of lying to investors about its track record to hide more than $29 million in losses. Lake Shore, which is incorporated in Bermuda and maintains an office in Chicago, has resisted agency efforts to inspect its books, arguing that the CFTC lacks jurisdiction over its offshore accounts.

The firm is subject to a parallel asset-freeze order imposed by the National Futures Association, a nonprofit self-regulatory organisation financed by the membership of futures market users.