Thursday, March 30, 2017

Flying the Cooperman

"Hedge fund billionaire Leon Cooperman charged with insider trading" by Renae Merle Washington Post   September 22, 2016

NEW YORK — Federal prosecutors on Wednesday charged hedge fund billionaire Leon G. Cooperman with insider trading, alleging that the Wall Street legend used confidential information to generate ‘‘substantial illicit profits’’ and then sought to cover it up.

The case centers on several trades Cooperman made in 2010 on Atlas Pipeline Partners, an energy company. In 2010, an Atlas executive told Cooperman that the company was preparing to sell a key asset, which would help relieve some of its financial crunch, according to the Securities and Exchange Commission complaint. Cooperman used that information to buy shares in the company and generate a $4.6 million profit for himself, his hedge fund, and a family member, according to the complaint.

‘‘Members of the investing public who traded [Atlas] securities at the same time as Cooperman and Omega were harmed because Defendants gained an advantageous market position through their misappropriation and use of material nonpublic information,’’ the SEC complaint said.

The charges will pit the SEC against a well-known Wall Street investor with a large following and who has shown little intention, so far, of relenting. Cooperman, 73, spent 25 years at Goldman Sachs before starting his own hedge fund in the 1990s. New York-based Omega Advisors now manages more than $6 billion in assets, and Forbes estimates that Cooperman is worth about $3.1 billion.

The allegations ‘‘are entirely baseless,’’ Cooperman’s attorneys said in a statement.

‘‘Mr. Cooperman acted appropriately at all times and did nothing wrong. We intend to vigorously defend against the charges and will not allow the SEC to tarnish the legacy Mr. Cooperman has built over the course of a legendary career spanning five decades,’’ the statement said.

According to the SEC, Cooperman, a longtime investor in Atlas, spoke with an Atlas executive, who was not named in the complaint, and learned the company was about to sell its natural gas processing facility in Elk City, Okla. Cooperman had agreed not to use the information to trade, the SEC alleged.

Instead, Cooperman directed Omega Advisors to buy shares in the company over several days. When the sale was announced, Atlas’s stock price jumped more than 30 percent and Cooperman made a profit, the SEC said.

The trading even raised suspicions in one of Cooperman’s family members, the SEC said. Before Atlas announced the asset sale, Cooperman told the family member a deal was pending. The family member, who was not named, said in an e-mail to a colleague that the news explained some ‘‘fishy’’ trading they had seen. ‘‘Somebody should investigate that,’’ the family member said in an e-mail, according to the SEC.

Later, Cooperman learned that the SEC was investigating his trading activity and allegedly contacted the Atlas executive who gave him the information and ‘‘tried to fabricate a story to tell if questioned.’’ Cooperman invoked his Fifth Amendment privilege against self-incrimination after being subpoenaed by the SEC, according to the complaint.

The SEC wants Cooperman to return all illicit profits, a relatively small sum for the billionaire, though he could also face an additional civil penalty if the case goes to court. An SEC official declined to comment on why the complaint was filed so long after the alleged illegal trading or on whether Cooperman could face criminal charges.

The agency also accused Cooperman of not properly reporting information about his hedge fund’s holdings.


RelatedSupreme Court sides with prosecutors in clash over insider trading laws

Also see:

"Hedge fund manager Leon Cooperman said regulators are considering taking action against him and his firm Omega Advisors over trading in certain securities, according to a person familiar with the matter. Cooperman told clients in a letter dated March 21 that he and his firm received a Wells notice regarding an investment in a single issuer that it had since 2007, said the person, asking not to be identified because the information isn’t public. Regulators are looking at trading in the security in 2010, the investor wrote, according to the person. Cooperman, 72, declined to comment on the Wells notice when reached by phone. He later told CNBC that the probe centers on trading of Atlas Pipeline Partners LP, a midstream operator that ran networks in Oklahoma, southern Kansas, Texas, and Tennessee before merging with a Targa Resources Partners LP unit about a year ago. Ryan White, a spokesman for the Securities and Exchange Commission, declined to comment on the investigation. The SEC sends a Wells notice to a company or an individual after its staff has determined that sufficient wrongdoing has occurred to warrant civil claims being filed."