SEC is back in the fight on insider trading

Famed investor Leon Cooperman was accused of insider trading by USA regulators in the government’s highest-profile case against a hedge fund manager since its crackdown on SAC Capital Advisors.

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 U.S. Securities and Exchange Commission said Cooperman’s trades earned roughly $4 million after he bought the stock of Atlas Pipeline Partners before it sold a gas processing facility.

Andrew Ceresney, director of the SEC’s division of enforcement, said Cooperman “took advantage of other investors who did not have this information”. When the sale was announced, the stock jumped by 31%, the SEC said, benefiting Omega Advisors.

Hedge fund legend Leon Cooperman said in a short call with investors Wednesday that he intends to fight charges of insider trading. The news comes as a big surprise for the industry as Cooperman is a renowned asset manager who is one of the founders of Goldman Sachs Asset Management. Still, prosecutors have decided not to pursue a case against Omega at this time following a U.S. Supreme Court ruling this year that made it more hard to bring insider trading charges, Cooperman said. The SEC said this executive was “angry” upon learning Cooperman traded.

“Somebody should investigate that”, the family member responded, apparently unaware of the origin of the trading. However, the regulator alleged that Cooperman subsequently attempted to “fabricate a story” with the Atlas executive. 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”. Before Atlas announced the asset sale, Cooperman told the family member a deal was pending.

The agency is seeking unspecified restitution of profits from the trading and money penalties from Cooperman and Omega.

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The fund has been expecting a steady return for its investors in 2016 in the aftermath of the Brexit debacle that sent stocks lower initially.

Three years ago, Steven A. Cohen’s SAC Capital Advisors pleaded guilty to insider trading but Cohen was personally never charged.