Thursday, 5 March 2015
Last updated 3 hours ago
Jan 10 2011 | 4:35am ET
Hedge fund Fontana Capital illegally sold short shares of three financial companies two-and-a-half years ago.
The Boston-based firm, founded by SAC Capital Advisors veteran Forrest Fontana, violated Rule 105, which bars participants in secondary offerings from shorting shares of the company five days before the offering’s pricing. The hedge fund made more than $1 million in illegal profits, according to an SEC administrative cease and desist order.
Fontana’s lawyer, Lisa Wood, told Reuters that the firm does not deny that it broke Rule 105, but said that the violations were “isolated, inadvertent, technical.” She added that two sides disagreed “over the measure of damages.”
According to the SEC, Fontana, which effectively shut its doors last year, illegally shorted shares of Merrill Lynch, XL Capital and Wells Fargo in 2008.
With Fontana contesting the charges, the hedge fund will now face a hearing within 60 days.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…