WASHINGTON (CN) – Perry Corp. will pay $150,000 to settle SEC charges that it failed to report that it had bought nearly 10 percent of the shares of Mylan Laboratories so it could vote its shares in favor of a merger from which Perry stood to profit – but Perry doesn’t admit or deny that it did it, the SEC said.
Institutional investors such as Perry must report to the SEC if they acquire more than 5 percent of the shares of a public company. The SEC says Perry did not disclose that it had bought nearly 10 percent of Mylan, which had announced it was buying King Pharmaceuticals.
The SEC says Perry used “merger arbitrage,” in which “Perry separately purchased the Mylan voting shares and entered into a series of ‘swap’ transactions – hedging transactions through the use of derivative instruments – designed to avoid any financial exposure from its ownership of those shares.”
In addition to the $150,000 fine, the SEC told Perry not to do it again.