By Mark Curriden of The Texas Lawbook
The U.S. Securities and Exchange Commission has charged a New York hedge fund manager with violating federal insider trading laws involving the 2010 purchase of securities of Atlas Pipeline Partners, which is now owned by Houston-based Targa Resources.
Regulators say that Leon G. Cooperman and his $5 billion investment firm Omega Advisors violated federal securities laws more than 40 times when they allegedly acquired large of amounts of stock in Atlas in advance of the pipeline company’s 2010 sale of its Elk City, Okla. natural gas processing operations.
The SEC alleges that Cooperman used his position as a large Atlas investor to obtain confidential, nonpublic information from a corporate executive and then earned a substantial profit by trading on that crucial information. Atlas shares jumped more than 30 percent immediately after the transaction was announced.
Officials with Omega say the SEC’s allegations are false and that Cooperman, 73, and the hedge fund, will fight the charges in court. The firm had no additional comments.
Cooperman led Goldman Sacks Asset Management in the 1970s and 1980s.
Targa Resources of Houston purchased Atlas in February 2015, which was five years after the Omega incident. Lawyers say that Targa officials have cooperated with the SEC’s inquiry.
SEC Director of Enforcement Andrew J. Ceresney said in a written statement that Cooperman used his access to Atlas executives to learn about the pending pipeline divestiture and then “abused that access by trading on this information.
“By doing so, he allegedly undermined the public confidence in the securities markets and took advantage of other investors who did not have this information,” Ceresney said.
The SEC subpoenaed Cooperman about 16 months after Omega made the stock transaction. The federal agency said that he then contacted the Atlas executive to try to get him to “fabricate a story to tell if questioned about this trading activity.”
The SEC, in its lawsuit filed against Omega in federal court in Philadelphia, said that the “executive was shocked and angered when he learned that Cooperman traded in advance of the public announcement.”
The SEC’s lawsuit seeks 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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