Judge Nixes SEC Charges Against Fund Manager

     (CN) – A federal judge in Manhattan dismissed charges that a financial fund manager committed securities violations, despite strong evidence against him. The SEC brought charges of securities fraud and insider trading against the Gryphon Master Fund and its managing partner, Edward Buchanan Lyon IV.




     The SEC alleged that Lyon “shorted the stock of four companies after being informed of those companies’ intentions to issue PIPEs (Private Interest in Public Entities) but before the offerings were publicly announced to the market.”
     The burden of proof was on the SEC to show that Lyon revealed material non-public information that he was obligated to keep confidential. U.S. District Judge Stein ruled that the SEC did not prove Lyon knowingly accepted a duty to keep the information confidential.
     “The SEC’s evidence, while very strong, fails to put these issues beyond dispute,” Stein wrote.
     For two of the four companies, “defendants never signed the placement agreements or chose to participate in the offerings,” the judge added.

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