Monday, 22 December 2014
Last updated 2 min ago
Jan 27 2010 | 3:42am ET
Two Los Angeles-based hedge funds have settled charges they illegally shorted stocks before participating in secondary offerings.
AGB Partners and Palmyra Capital Advisors are the first firms charged by the Securities and Exchange Commission under a revised rule barring so-called “shorting into the deal,” which forbids participants in secondary offerings from shorting the shares five days before the pricing of an offering.
“Rule 105 protects the pricing integrity that is essential to the capital raising process,” Marc Fagel of the SEC’s San Francisco office said. “By engaging in prohibited trading, these firms illicitly profited at the expense of public companies and their shareholders.”
Neither AGB nor Palmyra admitted or denied the charges. The latter agreed to pay more than $330,000 in disgorgement and penalties, while the former—along with its principals, Gregory Bied and Andrew Goldberger—will pay more than $50,000. Palmyra, AGB, Bied and Goldberger were all censured.
AGB, Bied and Goldberger argued that their trading fell under a loophole in Rule 105, designed to allow brokerages to both short a stock and buy it in a secondary offering on behalf of two different clients. But the SEC found that Goldberger’s and Bied’s “close collaboration with the accounts” mean the loophole didn’t apply to AGB.
Dec 1 2014 | 10:21am ET
As 2014 winds down, Northern Trust Hedge Fund Services executives took some time to share their outlook on trends facing the industry in 2015. Read more…
Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.