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SEC Charges Hedge Fund Icon Leon Cooperman With Insider Trading

Zero Hedge Wednesday, 21 September 2016 ()
SEC Charges Hedge Fund Icon Leon Cooperman With Insider TradingWhen it rains - for hedge fund managers, it pours - If it's not lack of alpha, it's insider trading. Moments ago, the SEC charged iconic hedge fund manager, Omega Advisors' Leon Cooperman with insider trading, accusing him of generating substantial illicit profits by purchasing securities in Atlas Pipeline Partners (APL) in advance of the sale of its natural gas processing facility in Elk City, Oklahoma.

The SEC adds that Cooperman "allegedly used his status as one of APL’s largest shareholders to gain access to the executive and obtain confidential details about the sale of this substantial company asset.  *Cooperman and Omega Advisors allegedly accumulated APL securities despite explicitly agreeing not to use the material nonpublic information for trading purposes, and when APL publicly announced the asset sale its stock price jumped more than 31 percent*."

*According to the SEC’s complaint, when Omega Advisors received a subpoena nearly a year-and-half later about its trading in APL securities, Cooperman contacted the executive and tried to fabricate a story to tell if questioned about this trading activity.  *The executive was shocked and angered when he learned that Cooperman traded in advance of the public announcement. 

The SEC’s complaint further charges Cooperman with failing to timely report information about holdings and transactions in securities of publicly-traded companies that he beneficially owned, alleging that he violated federal securities laws more than 40 times in this regard. 

Looks like Leon won't be making an Ira Sohn or CNBC appearance conferences in the near future.

* * *

From the SEC's press release:



The Securities and Exchange Commission today charged hedge fund manager Leon G. Cooperman and his firm Omega Advisors with insider trading based on material nonpublic information he learned in confidence from a corporate executive.


*The SEC alleges that Cooperman generated substantial illicit profits by purchasing securities in Atlas Pipeline Partners (APL) in advance of the sale of its natural gas processing facility in Elk City, Oklahoma*.  Cooperman allegedly used his status as one of APL’s largest shareholders to gain access to the executive and obtain confidential details about the sale of this substantial company asset.  *Cooperman and Omega Advisors allegedly accumulated APL securities despite explicitly agreeing not to use the material nonpublic information for trading purposes, and when APL publicly announced the asset sale its stock price jumped more than 31 percent.  *


According to the SEC’s complaint, when Omega Advisors received a subpoena nearly a year-and-half later about its trading in APL securities, Cooperman contacted the executive and tried to fabricate a story to tell if questioned about this trading activity.  The executive was shocked and angered when he learned that Cooperman traded in advance of the public announcement. 


*“We allege that hedge fund manager Cooperman, who as a large APL shareholder obtained access to confidential corporate information, abused that access by trading on this information,” *said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement.  “By doing so, he allegedly undermined the public confidence in the securities markets and took advantage of other investors who did not have this information.”


The SEC’s complaint further charges Cooperman with failing to timely report information about holdings and transactions in securities of publicly-traded companies that he beneficially owned, alleging that he violated federal securities laws more than 40 times in this regard. 


The SEC’s complaint was filed in federal district court in Philadelphia and seeks disgorgement of ill-gotten gains plus interest, penalties, and permanent injunctions against Cooperman and Omega Advisors as well as an officer-and-director bar against Cooperman.



For those wondering, here are Omega's Top 30 stock holdings as of June 30:


Full filing below (pdf):
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Source: Bloomberg Global Business - < > Embed

News video: Leon Cooperman Insider Trading Accusation Hits Markets

Leon Cooperman Insider Trading Accusation Hits Markets 01:40

Sept. 21 -- Hedge fund manager Leon Cooperman has been accused of insider trading by the U.S. Securities and Exchange Commission over his buying and selling of Atlas Pipeline Partners. Bloomberg's Julie Hyman examines the market impact of related companies and funds. She speaks on "Bloomberg...

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