Touradji Fined For Short-Sale Rule Violation

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.”


In Depth

High Time For A Cannabis Hedge Fund?

Sep 30 2014 | 7:07am ET

Launching a hedge fund is always a gamble, but Leslie Bocskor's decision to launch...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Appraisal Ratio Key To Evaluating Hedge Funds And Other New Investments

Sep 29 2014 | 3:07pm ET

As a former finance professor Peter Hecht experiences heartburn every time he hears...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

September 2014 Cover

High frequency market making

High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.