Thursday, 24 July 2014
Last updated 42 min ago
Dec 13 2006 | 10:43am ET
The Securities and Exchange Commission on Dec. 12 filed securities fraud and related charges against Edwin “Bucky” Lyon and hedge fund Gryphon Partners in Manhattan federal court. Gryphon allegedly carried out an illegal trading scheme to evade the registration requirements of the federal securities laws in connection with at least 35 public investments in private equity, or PIPE, transactions, made materially false representations to PIPE issuers and engaged in insider trading.
From 2001 through 2004, Lyon is accused of operating an unlawful trading scheme that enabled Gryphon to realize more than $6.5 million in gains by investing in PIPE offerings without incurring market risk. Specifically, the complaint alleges that Lyon and Gryphon, after agreeing to invest in a PIPE transaction, shorted the issuer’s stock, frequently through “naked” short sales in Canada. Once the SEC declared the resale registration statement effective, Lyon and Gryphon used the PIPE shares to cover the short positions, which is prohibited.
To avoid detection and regulatory scrutiny, Lyon and Gryphon allegedly employed a variety of deceptive trading techniques, including wash sales, matched orders and pre-arranged trades, to make it look like they were covering their short sales with open market shares. In fact, Lyon and Gryphon were on both sides of the fence and were covering with their PIPE shares.
The SEC is seeking to permanently enjoin Gryphon from future violations of the federal securities laws, disgorgement of ill-gotten gains 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…