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

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...