A hedge fund manager and former CEO of Goldman Sachs Asset Management has been charged with insider trading by the US Securities and Exchange Commission (SEC).
Leon Cooperman and Omega Advisors, the firm he founded in 1995, were accused of generating “substantial illicit profits” through trading shares of Atlas Pipeline Partners in 2010. Cooperman was chairman and CEO of Goldman Sachs Asset Management between 1989 and 1991.
Cooperman used his position as a “significant” shareholder—owning roughly 9%, or $46 million, of the company’s shares—to get information from an executive about the sale of a natural gas processing facility, the SEC said in its legal complaint.
“Cooperman and Omega Advisors allegedly accumulated [Atlas] securities despite explicitly agreeing not to use the material nonpublic information for trading purposes,” the regulator added in a press release. When the sale was announced publicly, “its stock price jumped more than 31%.”
Omega Advisors was issued a subpoena relating to its trading in Atlas stock 17 months later, the SEC said. However, the regulator alleged that Cooperman subsequently attempted to “fabricate a story” with the Atlas executive. “The executive was shocked and angered when he learned that Cooperman traded in advance of the public announcement,” the SEC said.
On top of the Atlas allegations, the SEC has charged Cooperman with “failing to timely report information about holdings and transactions in securities of publicly-traded companies that he beneficially owned.” The regulator alleged he had broken securities laws “more than 40 times in this regard.”
The SEC is demanding repayment of “ill-gotten gains plus interest [and] penalties,” as well as permanent injunctions against Cooperman and Omega.
The US regulator’s clampdown on insider trading in recent years has resulted in a number of high-profile actions, including against the former CIO of the Wyoming Retirement System, a number of former portfolio managers from Steven Cohen’s SAC Capital, and a hedge fund manager at Visium Asset Management.