The Wall Street Journal said that previous to obtaining the confidential information from the executive, Cooperman had, through 2010’s first half, decreased his accounts’ exposure to the securities at issue. According to the SEC, after the sale was announced, Cooperman’s trades made about $4M in profits, benefitting him, his family, and his firm’s hedge funds. The regulator said that Cooperman had directed the trading of bonds, call option, and stocks. Some of what he traded expired soon after he bought them.
The SEC also is accusing Cooperman of violating federal securities laws over forty times when he did not report in a timely manner information about transactions and holdings in the securities of publicly traded companies in which he had beneficial ownership.
Cooperman had been named among the highest paid hedge fund managers in the industry. The New York Times reports that according to Institutional Investor’s yearly list of the wealthiest fund mangers, he made $825M in 2013. In the wake of losses he sustained last year, however he was not on the subsequent list.
Cooperman has denied doing anything wrong. In a memo to clients, he told them that he was disappointed with the regulator’s decision to file civil charges.
Meantime, the New Jersey’s U.S. Attorney’s office is conducting its own probe into Cooperman and Omega. They are also examining the Atlas Pipeline deal to determine whether illegal transactions were involved. Addressing the probe with investors, Cooperman said that the prosecutors are refraining from filing criminal charges until the U.S. Supreme Court issues a ruling in a case involving the brother-in-law of a Citigroup (C) investment banker who was accused of using the banker’s tips to insider trade. The man was convicted in court.
At issue in that case is whether prosecutors can pursue charges when the person providing the insider information stands to gain nothing personally by sharing the insider information. However, as the WSJ reports, the SEC in its case involving Mr. Cooperman contends that he misappropriated the information. This means that it doesn’t need to prove that the executive who shared the information with him benefitted.