Posted by Milan Rana.
Finally, SEC’s one of the biggest insider trading case reached a settlement on May 18, 2017. This case is no different than other wall street insider trading cases. However, the important thing to note here is unlike other hedge fund managers, Mr. Cooperman did not plead guilty to the charges against him. In an interview with CNBC he said, he would have won the case had it gone forward. Fortunately, he learned from his lawyers that settling the case would cost him far less than dragging it a long way, even though he knew he would have won regardless. Upon reading the details of the case, we realize that the defense seemed to be weak and hard to prove. Yet, it is surprising that how court let him go with a penalty of couple million dollars. On September 21, 2016, the SEC charged hedge fund manager Leon Cooperman and his firm Omega Advisors with insider trading based on the nonpublic information received and used by Mr. Cooperman. The SEC alleged that in 2010 Mr. Cooperman generated significantly large profits by trading securities of APL (Atlas Pipeline Partners L.P.) based on the information that he received from the APL senior executives. The Venue for this case was carefully selected as the violations of the securities occurred in the Eastern District of Pennsylvania.
After spending 23 and a half years at Goldman Sachs, with last 1 and a half year serving as a Chief Investment Officer, he decided to move on and start his own hedge fund company. He had learned and practiced many client building and maintaining tactics while working at Goldman Sachs. One of the powerful strategies of Cooperman was to accumulate large positions in the publicly traded companies and develop close relations with the company executives. By December 2009, Cooperman held over 9 percent shares APL, valued at approximately $46 Million. As a result of this, he developed such close relationships with company executives that led him access to various information that other smaller shareholders had no access to. On July 7, 2010, Cooperman learned from one of the APL executives that APL was negotiating the sale of Elk City(One of the APL’S largest pipeline plant) for approximately $650 million. He knew that if the deal goes through, APL stock prices would rise significantly.
According to the SEC report filed with the court, Cooperman promised the executive to keep the information secret and would not use it to trade the securities. However, he did not abide by the promise and that same day he started buying APL securities. He bought every security he could – Stocks, Bonds, Call Options. The report also states that until July 7, 2010, there was not a single day on which Cooperman’s Offshore Account, Hedge Fund Accounts, Managed Accounts and Family Accounts traded in APL securities. However, between July 7 – July 28, 2010, Cooperman and his accounts had purchased 343,600 Stocks, 4,500,000 Bonds and 6,781 Call options of APL. On July 27, 2010, Cooperman spoke to one of the executives again and confirmed the sale for $680 Million. Mr. Cooperman allegedly collectively generated $4.09 Million by trading in APL securities. The report also states that in breach of a duty of trust or confidence, Cooperman and Omega knowingly or recklessly traded APL securities on the basis, and while in possession of material nonpublic information related to APL’ s Elk City sale that Cooperman obtained from APL Executive.
According to the article titled “The SEC’s Biggest Insider Trading Case Is Heating Up” in Fortune magazine, stated that in his one of the television appearance Cooperman uttered the words, “These charges are total without merit.” This case has largely impacted his reputation as a hedge fund manager. Two years ago, his firm Omega had $10.4 Billion in assets, which slid to $3.4 Billion now. Moreover, he had also decided that if the case would drag long enough, he would consider closing the business. After all it’s all about the hard-earned respect and reputation he has earned being in this industry.
A Forbes article titled “Hedge Fund Billionaire Leon Cooperman Settles With SEC On Insider Trading Charges.” States that SEC had offered Cooperman the opportunity to settle the case agreeing to five-year industry ban. He instead chose to contest the charges in order to keep his reputation intact. Months after when the case was set for trial, the court approved the settlement of $4.9 Million in fines and penalties and agree to have an independent compliance monitor at his funds. The SEC has also provided the phone conversation of Mr. Cooperman and Executives in their report. Also looking at the transactions that Mr. Cooperman and his firms made, it clearly shows that he has received some kind of tip that he suddenly started buying APL securities. Yet, it is very hard to believe that he got off the hook without pleading guilty, with a smaller fine than expected, and still in business.
Milan is a graduate student in the Feliciano School of Business, Montclair State University.
Bibliography
Celarier, Michelle. “The SEC’s Biggest Insider Trading Case Is Heating Up.” Fortune Finance. Fortune, 18 Jan. 2017. Web.
Gara, Antoine. “Hedge Fund Billionaire Leon Cooperman Settles With SEC On Insider Trading Charges.” Forbes. Forbes Magazine, 19 May 2017. Web.
SEC VS LEON G. COOPERMAN. No. 2:16-cv-05043-JS. The Eastern District of Pennsylvania. 20 Mar. 2017. Web.
Posted by Ovais Ahmed.
An article posted on bloomberg.com talks about an appeal made by ex-Goldman Sachs trader Deeb Salem to get an extra $5 million he thinks he deserves in bonus money. He has already received $8.25 million and still wants to get more money out of his former company. I don’t understand why the trader can’t settle with the money he has already made, which is more than the average American would probably ever make. To me, it spells out nothing but greed. Salem states he helped Goldman Sachs earn $7 billion in profit and was sought after by many investment professionals in his industry. The article states:
In September, Justice Eileen Bransten denied Salem’s request to set aside a Financial Industry Regulatory Authority panel decision to dismiss his claim, and granted Goldman Sachs’s request to seal portions of the dispute with the former trader. Salem told a state appeals court in Manhattan today that the judge erred in her decision, according to a filing. Salem claimed he helped the bank earn more than $7 billion, and told the arbitration panel Feb. 25 that he was one of the most sought-after investment professionals in the mortgage industry. The panel, described by Salem’s lawyer as a ‘kangaroo court,’ didn’t let Salem call some of Goldman Sachs (GS)’ top trading executives as witnesses, resulting in a miscarriage of justice, according to his original petition.
Goldman Sachs claimed they gave Salem the opportunity to give his evidence, and followed through fully with the law in denying his award claim. Therefore, Salem has appealed the decision is continues his fight for the extra $5 million he believes he deserves due to his efforts at Goldman Sachs.
Ovais is a business administration major with a concentration in management at Montclair State University, Class of 2015.
Posted by Giancarlo Barrera.
Goldman Sachs was infamously named “The Wolf of Wall Street.” Goldman created, convinced, and sold mortgage investments that had been designed to fail in the first place.corruption at its finest. It was corruption at its finest. Goldman even went as far as betting against the same derivatives it was promoting and selling to their own clientele. Goldman accepted that it misled investors the wrong way, but did not admit to any scheming or wrongdoing.
In July 2010, Goldman paid an enormous SEC fine of 550 milion dollars. It was one fine after another. Then in April 2012, Goldman paid a fine of 22 million dollars for allowing insider trading of non-public information to Goldman’s clients and traders since 2007. On the link, the story goes into further detail of how much fraud and dishonesty was played under the table and behind the backs of its own clients, who the company was supposed to help invest their money in the first place.
Business is business.
Giancarlo is an economics and finance major at Montclair State University, Class of 2016.