PHILADELPHIA (CN) - The Securities and Exchange Commission brought a federal complaint against a septuagenarian hedge-fund manager who it says made more than $4 million trading on inside information.
A 73-year-old resident of Boca Raton, Florida, Leon Cooperman is the president and CEO of Omega Advisors. The SEC hit Cooperman and his firm with a federal complaint Tuesday in Philadelphia.
It says he owned more than 9 percent of the shares of a Philadelphia natural-gas firm called Atlas Pipeline Partners in late 2009.
That position was worth approximately $46 million, according the complaint, and it gave Cooperman "a level of access to APL's executives that was not available to APL's smaller shareholders."
The SEC says Cooperman put that access to use in 2010 when a senior APL executive gave him a lucrative tip.
APL was experiencing financial difficulties that year and had received an offer to sell its operating facilities in Elk City to Enbridge Energy Partners for $720 million.
"Elk City was a significant APL asset, which included 800 miles of natural gas gathering pipeline, a hydrogen sulfide treating plant, and three cryogenic processing plants, with a total capacity of approximately 370 million cubic feet of natural gas per day and a combined natural gas liquid production of 20,000 barrels per day," the complaint states.
When APL announced the sale publicly on July 27, 2010, its shares increased that day by 31.3 percent, according to the complaint.
The SEC says Cooperman had been reducing his position in APL earlier that year but did a 180 after a 6-minute phone call with his APL executive friend on July 7.
That day Cooperman's various accounts bought nearly 2,000 APL call options — and he didn't stop there, according to the complaint.
When all was said and done, Cooperman's APL trading activity between July 7 and July 27 netted profits of roughly $4.09 million, the complaint says.
Cooperman had not apprised his APL executive friend about the trades, however, according to the complaint. The SEC says this executive "was shocked and angered when he learned that Cooperman and/or accounts that Cooperman managed traded in APL securities in advance of the public announcement of the Elk City sale."
Cooperman tried to cover-up his insider trading, according to the complaint, when Omega Advisors received a subpoena in late 2011.
"Cooperman improperly sought APL Executive 1's assurance that APL Executive 1 had not shared confidential information with him in advance of the announcement of the Elk City sale, despite knowing this was not true," the complaint states. "APL Executive 1 believed that Cooperman was attempting to fabricate a story in case the two were questioned about their conversations regarding Elk City."
The SEC says Cooperman violated federal securities laws more than 40 times.
It wants disgorgement of ill-gotten gains plus interest, penalties, and permanent injunctions against Cooperman and Omega Advisors, as well as an officer-and-director bar against Cooperman.
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