Level Global Settles Short-Selling Allegations

Jul 1 2011 | 12:39pm ET

Level Global Investors, one of the now-defunct hedge funds caught up in the Justice Department's crackdown on expert networks, has settled separate Securities and Exchange Commission allegations.

The $3.5 billion firm, which said in February it would shut its doors, agreed to pay $3.2 million to resolve allegations that it "shorted into the deal" twice with financial stocks. According to the SEC, Level Global earned $2.68 million covering their shorts of  Goldman Sachs and Regions Financial Corp. in public offerings. The SEC's Rule 105 forbids firms from participating in such offerings within five days of shorting a stock.

The hedge fund did not admit or deny any wrongdoing.

Level Global likewise said it did nothing wrong in the insider-trading probe. But that wasn't enough to save the firm, which was inundated by redemption requests after the Federal Bureau of Investigation raided its offices in November.

Ironically, a Goldman Sachs private equity fund, Petershill, owned a minority stake in Level Global.


In Depth

Electronifie: Better Bond Trading

May 11 2016 | 3:03pm ET

Technology has revolutionized countless aspects of investing and trading, but the...

Lifestyle

From Modern Trader: Stephen Curry is a Black Swan

May 18 2016 | 7:43pm ET

What do the rise of the Internet, the sinking of the Titanic, 9/11, and Stephen...

Guest Contributor

LendingClub and the Question of Internal Hedge Funds

May 19 2016 | 8:42pm ET

Peer-to-peer lending platform LendingClub Corp. has been in the news since the firm...