Hedge Fund Gryphon Wins PIPEs Charge Dismissal

Jan 4 2008 | 8:18am ET

The Securities and Exchange Commission suffered another setback to its effort to restrict hedging with private investment in public equities, as a federal judge dismissed the regulator’s charges against a hedge fund.

The SEC had claimed that Dallas-based Gryphon Partners had violated Section 5 of the Securities Act of 1933 when it covered short positions using PIPE shares. It is the second such ruling on the federal level; in October, a federal judge in Charlotte, N.C., dismissed the SEC’s charges against John Mangan, formerly of hedge fund Mangan & McColl Partners.

In dismissing the charges against Gryphon chief Edwin Lyon and the Gryphon Family of Funds, U.S. District Judge Sidney Stein in New York called the SEC’s theory that covering short sales with PIPE shares is an unregistered distribution of securities “implausible,” and the “negligible support” it provided.

“We are very gratified that Judge Stein has rejected what was the centerpiece of the SEC’s case against Gryphon and myself,” Lyon, who, like Mangan, still faces other charges, said. “We look forward to prevailing on the few remaining issues in the case and believe that we will be entirely vindicated in this matter.”

“Judge Stein’s well-reasoned and careful opinion obviously undermines the SEC’s entire theory of a Section 5 violation both in this case, and the many, many other enforcement actions that the SEC has brought and is considering bringing against other hedge funds,” Gryphon’s lawyer, Christopher Clark, said. “This is an important decision for Gryphon, for Bucky Lyon and for the hedge fund community as a whole.”


In Depth

Star Fund Managers Battered By Rocky Ride In Yields, Currencies

May 28 2015 | 6:05am ET

Some of the biggest names in the investment world have been whipsawed by the recent...

Lifestyle

Yale Receives $150 Million Gift from Blackstone’s Schwarzman

May 12 2015 | 12:10am ET

Yale University announced it has received a $150 million gift from Blackstone Group...

Guest Contributor

The Road To Tax Alpha

May 28 2015 | 5:36am ET

Tax-related alerts are increasingly helping investment managers harvest tax alpha...

 

Sponsored Content

Editor's Note