Thursday, 24 July 2014
Last updated 1 hour ago
Dec 14 2011 | 2:01pm ET
New York-based Touradji Capital, a hedge fund specializing in commodities, has been fined roughly $1.3 million for a short-sell stock violation, according to the U.S. Securities and Exchange Commission.
The $2 billion fund run by well-known commodities trader and Tiger Cub Paul Touradji, has been rapped for violating Rule 105 of Regulation M of the Exchange Act by selling stock short during a restricted period prior to a public offering and buying back the same securities later in the offering. According to SEC filings, the hedge fund manager made about $834,000 as a result of these violations.
"On three occasions, from October 2007 through July 2008, Touradji Capital bought offered shares from an underwriter or broker or dealer participating in a follow-on public offering after having sold short the same security during the restricted period," the SEC said in a statement on December 13.
The stocks involved were McMoRan Exploration Company, Chesapeake Energy Corp., and GMX Resources. The SEC says the firm made no profit on the first trade (made in 2007), but did make money on the last two (both made in 2008).
The regulator says that although the company provided “some” Rule 105 training to its employees during the relevant period, it did not have in place “policies, procedures and controls…sufficient to prevent or detect Rule 105 violations.”
The penalties included disgorgement in the amount of $833,976, prejudgment interest in the amount of $119,360, and a civil monetary penalty in the amount of $350,000 to the United States Treasury.
The SEC also notes that “[t]he trading decisions that gave rise to the foregoing violations of Regulation M were made by two former employees of Touradji Capital whose employment ended in late 2008.”
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…