The Securities and Exchange Commission is moving to dismiss its lawsuit against hedge fund Silver Point Capital that centered on alleged compliance failures over the receipt of material nonpublic information around bonds issued by Puerto Rico.
The final dismissal is subject to a vote by the SEC’s commissioners.
Silver Point said in a statement it was pleased that the SEC’s enforcement staff has agreed to dismiss the lawsuit with prejudice.
“There was absolutely no basis in the evidence or the law for the claims asserted by the SEC, and the SEC should never have filed this action in December 2024,” Silver Point said in the March 6 statement. “Silver Point seeks to always operate with the highest ethical standards and to maintain best-in-class compliance policies and procedures.”
An SEC spokesperson said, “We decline comment beyond our public filings on this matter.”
As part of the agreement, Silver Point has agreed to waive any claims against the SEC, according to a March 6 filing in the U.S. District Court of Connecticut. The two parties said in the filing they anticipate that on or before April 17 they will make a filing to dismiss the case.
The SEC sued Silver Point last year, and the credit-focused hedge fund said it “refused to settle” with the regulator.
The SEC had alleged that Chaim Fortgang, a bankruptcy attorney who has since died, served as a consultant for Silver Point while possessing material nonpublic information about Puerto Rico bonds that Silver Point had purchased. The regulator alleged that Fortgang had “extensive communications” with Silver Point’s public trading desk without involving the firm’s compliance department, creating risk that the hedge fund could have misused the information.
Silver Point said in December that after a four-year investigation and review of approximately 350,000 documents, the SEC had not alleged that “Fortgang improperly conveyed any information to the firm’s public side or that Silver Point otherwise engaged in any type of improper activity or trading.”
Silver Point was founded in 2002 by former Goldman Sachs partners Ed Mule and Bob O'Shea and has about $38 billion in investable assets under management.
