The U.S. Securities and Exchange Commission on September 21 charged hedge-fund manager Leon Cooperman and his firm Omega Advisors with illegal insider trading, alleging that Cooperman profited by trading on material nonpublic information he learned about Atlas Pipeline Partners.
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“On July 7, 8 2010, APL’s stock price closed at $9.66, and the call options the Cooperman Offshore Account, Hedge Fund Accounts and Managed Accounts purchased were significantly out-of-the-money”. The SEC declined to name the executive, and no one else was charged with insider trading connected to the case, other than Cooperman and his fund. The SEC complaint includes a 2010 email that the person wrote to an Atlas Pipeline executive.
The SEC alleges that Cooperman, 73, traded on non-public information in the summer 2010 he learned from a corporate executive at Atlas Pipeline Partners before the sale of its natural gas processing facility in Elk City, Oklahoma. The fund had been bearish on its position in the first half of 2010, the SEC’s complaint notes, pointing out that Cooperman allegedly described it as a “sh-y business”.
Attorneys representing Cooperman and Omega didn’t immediately return calls seeking comment. Cooperman, who used the information to purchase a stake in Atlas’ stock, reaped major rewards when the stock price jumped by nearly a third after the company made the information about the sale of the facility available to the public.
After running an analysis on how the deal would impact Atlas securities, Cooperman and Omega purchased even more options and bonds in the days that followed, the SEC said. When the sale was announced, Atlas stock rose 31%, the SEC says. Visit MarketWatch.com for more information on this news.
The SEC alleges that, upon receiving a subpoena, Cooperman contacted the Atlas executive who had previously provided the information used to make the illegal trade, attempting to concoct an excuse in the event of a line of questions about the Atlas trades. The executive was shocked and angered when he learned that Cooperman traded in advance of the public announcement.
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Finally, the SEC said, Cooperman violated the beneficial ownership reporting provisions over 40 times. Cooperman was a large investor in Ocwen, the large mortgage service that ran into major problems two years ago.
