J.P. Morgan Chase and Omega Advisors were among six firms sanctioned by the Securities and Exchange Commission over claims that they bet against companies’ stock shortly before participating in new share offerings.
The six firms agreed to pay more than $2.5 million to resolve SEC allegations that they illegally profited by artificially lowering the companies’ stock, the agency said in a statement Wednesday.
The SEC has made a priority of policing violations of a rule meant to protect stock pricing mechanisms and prevent manipulation since adopting a “zero tolerance” policy in 2013. Since then, the agency says, there has been a substantial decrease in the number of infractions. In two previous sweeps, the SEC won more than $20 million in penalties from 42 firms.
“This highly successful program of streamlined investigations and resolutions of Rule 105 violations has clearly had an important deterrent impact on the market while expending a fraction of the resources that we have dedicated in the past,” said Andrew Ceresney, director of the SEC’s enforcement division, in the statement.
J.P. Morgan will pay more than $1 million, including the return of $662,763 in profits, $56,758 in interest and a $364,689 fine. Omega, which is run by billionaire Leon Cooperman, will pay about $134,000, including a $65,000 fine and about $69,000 in disgorgement and interest. Both companies agreed to settle without admitting or denying wrongdoing.
“There was no allegation that J.P. Morgan intentionally violated the rule or that any clients were harmed,” Darin Oduyoye, a J.P. Morgan spokesman, said in a statement. “We have further enhanced our policies and procedures since 2012.” An attorney for Omega didn’t immediately respond to a request for comment on the SEC order.
The other firms sanctioned by the SEC were Auriga Global Investors, Harvest Capital Strategies, Sabby Management and War Chest Capital Partners.