Leon G. Cooperman and Omega Advisors were charged with insider trading by the Securities and Exchange on Wednesday.
The civil complaint, filed in U.S. District Court in Philadelphia, alleged that in July 2010 Mr. Cooperman — founder, chairman and CEO of Omega — received confidential information from an executive of Atlas Pipeline Partners about an impending sale of a natural gas processing facility in Elk City, Okla. The complaint alleges Mr. Cooperman and Omega Advisors “generated substantial illicit profits” by buying Atlas securities in advance of the sale of the Elk City plant, said an SEC news release.
The SEC further alleged in the complaint that Mr. Cooperman agreed not to trade in Atlas Pipeline Partners securities based on the material non-public information the company executive gave him. However, the complaint stated that between July 7, 2010, and July 27, 2010, “at Mr. Cooperman's direction,” Omega's commingled hedge funds and managed accounts, and Cooperman family accounts bought Atlas securities, which generated a profit of $4.1 million. Atlas Pipeline Partners' stock price rose 31% when the company announced the natural gas plant sale.
Mr. Cooperman also is charged with failure to file timely beneficial ownership reports about holdings and transactions in publicly traded companies he made. The SEC said Mr. Cooperman violated beneficial reporting provisions more than 40 times about eight different issuers since August 2014.
Mr. Cooperman did not return a call seeking comment, but the firm provided Pensions & Investments with a letter Mr. Cooperman sent to investors Wednesday. “We are highly disappointed with the commission's decision to file charges and we strongly disagree with the commission that either the firm or I have engaged in any unlawful conduct,” Mr. Cooperman said in his letter.
Mr. Cooperman also told investors that the U.S. Attorney's office for New Jersey said that an 18-month long investigation into his own and Omega's activities was not finished, but that it will not pursue charges, pending the U.S. Supreme Court's decision on insider-trading case Salman vs. United States.
The SEC complaint seeks the return of ill-gotten gains as well as interest, penalties and permanent injunctions against Mr. Cooperman and Omega Advisors, as well as a permanent ban against the hedge fund manager.
Omega had $5.4 billion in assets under management as of Aug. 31, according to its website.