OZ Management LP will pay a $4.25 million penalty to settle charges that it provided inaccurate trade data to four prime brokers, the Securities and Exchange Commission said Tuesday.
OZ Management, an investment adviser for numerous Och-Ziff Capital Management Group funds, admitted wrongdoing. SEC officials said that for nearly six years until December 2013, OZ Management misidentified some trades in data provided to the brokers. Trade settlement was not affected, but the SEC said in a statement that the erroneous data “had a significant impact” because the four prime brokers inaccurately listed roughly 552 million shares in their own records and provided incorrect data in SEC “blue sheet” requests, which help identify possible misconduct and reconstruct trading after extreme market volatility.
“OZ Management's inaccurate data had a substantial ripple effect that the SEC staff discovered through diligent investigative work,” said Andrew Ceresney, director of the SEC's enforcement division, in a statement.
During an investigation in 2013, SEC officials found a discrepancy with trades not characterized as long or short based on when they were sent to the market, but instead based on other factors, such as the relevant fund's position in the stock at the prime broker. That caused some long sales to be erroneously shown as short sales in data provided to the firm's prime brokers. OZ Management has since provided corrected historical information to the affected prime brokers who are now making their own corrections, the SEC said.
The SEC also found that OZ Management violated SEC Rule 105 by wrongfully purchasing stock during a restricted period for a secondary offering in 2011. OZ Management will return $243,427 of gains and interest from that trading.
“This reporting issue has been resolved, and we have taken steps to ensure that it does not reoccur,” an Och-Ziff spokesman said in an e-mail.
Oz Management is a subsidiary of Och-Ziff Capital Management Group, which reported $48.3 billion in assets under management as of March 31.
