Wednesday, 23 July 2014
Last updated 13 hours ago
Nov 6 2007 | 12:20pm ET
The Securities and Exchange Commission has reached a settlement with New Jersey-based hedge fund TCMP3 Partners and portfolio managers Walter Schenker and Steven Slawson in connection with 26 illegal unregistered securities offerings or private investment in public equities.
From mid-2003 through 2004, Schenker and Slawson allegedly locked-in approximately $887,000 in ill-gotten gains from illegal PIPEs trades. Typically, after agreeing to invest in a PIPE transaction, Schenker and Slawson, on behalf of TCMP3, sold short the issuer's stock. Later, once the Commission declared the resale registration statement effective, they used the PIPE shares to close out the short positions.
For example, in April 2004 TCMP3 invested $155,000 in the Indus International PIPE offering and received 50,000 restricted Indus shares at $3.10 per share at a discount of approximately 7% from Indus's then-current market price of approximately $3.33 per share. TCMP3 sold short all 50,000 of its restricted shares, garnering proceeds of $167,000.
Once the Commission declared the resale registration statement effective, Schenker and Slawsonc marked the freely tradable PIPE shares to TCMP3's short account to close out the 50,000 short positions. TCMP3's profit was therefore locked in at the moment it executed its short sales: the $167,000 short sale proceeds minus the $155,000 investment, for a net profit of $12,000.
Schenker and Slawson, without admitting or denying the allegations in the complaint, have agreed to pay a total of $1,1 million in disgorgement, prejudgment interest, and civil penalties.
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…