Sunday, 7 February 2016
Last updated 1 day ago
Jun 2 2014 | 6:31am ET
Hedge fund manager Nelson Obus was cleared of insider-trading allegations on Friday, ending a decade-long legal battle.
A federal jury in New York found the Wynnefield Capital founder and two co-defendants were not liable for fraud. The Securities and Exchange Commission sued Obus, his analyst Peter Black, and Black’s friend Thomas Strickland in 2006, alleging that Wynnefield earned $1.3 million on illicit trades five years earlier.
According to the regulator, Obus bought up shares of SunSource after Black learned from Strickland that Allied Capital Corp. planned to acquire the company. Strickland worked at GE Capital, which was involved in the deal. During the trial, SunSource’s former CEO testified that Obus told him a “little birdie” had tipped him off about the deal.
Obus’ lawyers countered that the alleged crimes would make their client the “lamest insider-trading in history.”
It took the jury less than two days to clear Obus, Black and Strickland. Obus left the courthouse to don a special red victory tie, blasting what he called “the SEC’s 12-year campaign of regulatory overreach.”
SEC spokesman John Nester said the agency was “disappointed,” but “we respect the jury’s verdict.”