Friday, 25 July 2014
Last updated 11 min ago
Jul 6 2010 | 12:37pm ET
Appaloosa Management has settled charges that it broke a Securities and Exchange Commission rule barring short-sellers from participating in secondary offerings.
The SEC said the Chatham, N.J.-based firm agreed to pay $1.3 million—including $842,500 in disgorgement—to settle the SEC’s investigation of the firm’s purchase of 125,000 Well Fargo shares in November, while it was shorting the bank’s stock. The SEC’s Rule 105 bars investors with a short interest in a stock five days before a stock offering from participating in that offering, a practice known as “shorting into the deal.”
Appaloosa has denied knowingly doing anything wrong, writing investors in March, “There is no assertion that Appaloosa knowingly acted to manipulate the market for Wells Fargo stock.” The SEC acknowledged that the hedge fund did not use the shares it purchased to cover its short interest, instead selling them about a week after buying them.
In addition to the disgorgement, fines and prejudgment interest, Appaloosa—which is not registered with the SEC—has agreed to put in place policies to prevent future Rule 105 violations and to name a chief compliance officer.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…