The Securities and Exchange Commission has charged Leon Cooperman of Omega Advisors with insider trading.
The trading allegedly involves Atlas Pipeline Partners, according to the SEC complaint.
The key details from the charges are as follows:
- First half of 2010 -“Cooperman reduced his stake in APL, by, among other things, directing accounts he controlled to sell APL stock worth millions of dollars.”
- July 7 2010 – “Cooperman expressed to Omega Consultant that APL was a ‘shitty business.'”
- “Cooperman spoke with APL Executive 1 on the telephone on July 7, 19 and 20, 2010. During these telephone conversations, APL Executive 1 informed Cooperman that APL was negotiating the sale of Elk City and Cooperman asked APL Executive 1 questions about the Elk City sale. In at least one of these conversations, APL Executive 1 told Cooperman that APL was selling its Elk City facility for approximately $650 million.”
- “During one of these conversations in which APL Executive 1 told Cooperman confidential information about the Elk City sale, Cooperman explicitly agreed that he could not and would not use the confidential information APL Executive 1 told him to trade APL securities. Cooperman, however, did not abide by his agreement to maintain in confidence, and not trade on the basis of, the Elk City sale information.”
- “Cooperman spoke to APL Executive 1 at approximately 2:06 p.m. EDT for about six minutes. Despite taking a bearish position on APL throughout the first half of 2010 and calling APL a “shitty business” earlier that day, after speaking to APL executive 1, Cooperman began buying APL securities.”
- “On July 7, 2010, at Cooperman’s and Omega’s direction, the Cooperman Offshore Account, Hedge Fund Accounts and Managed Accounts purchased a total of 1,966 APL call options with a strike price of $15.00, expiring August 21, 2010. The call options purchases accounted for over 90% of the day’s trading volume in that option series. On July 7, 8 2010, APL’s stock price closed at $9.66, and the call options the Cooperman Offshore Account, Hedge Fund Accounts and Managed Accounts purchased were significantly out-of-the-money.”
- July 20 2010 – “At approximately 9:43 a.m. EDT, Cooperman spoke on the telephone with APL Executive 1 for about seven minutes, while APL Executive 1 was located in the Eastern District of Pennsylvania.”
- “Almost as soon as his call with APL Executive 1 concluded, at approximately 9:50 a.m. EDT, Cooperman called Omega Consultant on the telephone. During the telephone conversation, Cooperman told Omega Consultant that Cooperman had learned from someone at APL that APL had reached a deal to sell Elk City for $650 million. Cooperman and Omega Consultant discussed how APL’s stock price would react to public disclosure of the Elk City sale. Omega Consultant told Cooperman that the announcement that APL was going to sell Elk City for $650 million would cause APL’s stock price to increase significantly.”
- July 22 2010 – “At approximately 9:40 a.m. EDT, Cooperman called APL Executive 2’s Philadelphia, Pennsylvania office telephone line. Cooperman asked APL Executive 2 about the progress of the Elk City sale. APL Executive 2 was surprised that Cooperman knew about the Elk City sale given that APL had taken substantial steps to keep the transaction confidential.”
- July 27 2010 – “At approximately 7:52 p.m. EDT, Cooperman spoke on the telephone with APL Executive 1, who told Cooperman that APL’ s board had approved the Elk City sale.”
- “On July 27, 2010, at approximately 8:36 p.m. EDT, Cooperman sent an email to a family member, who also was a hedge fund manager, stating: Good news on APL … [t]hey sold their ELK City operation for $682mm which will enable them to pay off bank debt, de-risk company because keep whole contracts largely gone and fund their Laurel Mountain obligations. We think stock worth at least $15 in near term—for what that is worth.”
- “Cooperman’s family member forwarded this email to a colleague who replied, in part: “That explains the fishy $17 August calls, etc. I still haven’t come across any press release – want to see how it’s discussed ….” Cooperman’s family member responded: “Somebody should investigate that.”
- July 28 2010 – “At approximately 6:59 a.m. EDT, APL publicly announced for the first time that it was selling Elk City for $682 million. As a result, on that day, APL’ s stock price increased approximately 31 % and other APL-related securities greatly increased in value.”
- “The Cooperman Offshore Account, Hedge Fund Accounts, Managed Accounts and Family Accounts generated profits of approximately $4.09 million by trading APL securities at Cooperman’s direction between July 7, 2010 and July 27, 2010.”
- “After APL announced the Elk City sale, Cooperman’ s hedge fund manager family member 13 emailed APL Executive 3 twice, complaining about APL options activity prior to the public announcement ofthe Elk City sale, stating: Can you please call me[?] Been trying to get you last few days[.] [T]here had been some fishy options trades in apl [sic] before this that somebody should investigate.”
- “I also would like to make sure that the sec [sic] looks into the shady option trades and volume in apl [sic] last 2 weeks or so in front of this deal[.] How do I become a whistle blower[?]”
- “APL Executive 1 was shocked and angered when he learned that Cooperman and/or accounts that Cooperman managed traded in APL securities in advance ofthe public announcement ofthe Elk City sale.”
- Late 2011 – early 2012 – “Cooperman spoke on the telephone with APL Executive 1. During this call, Cooperman informed APL Executive 1 that the Commission had sent Omega a subpoena relating to trading in APL securities in advance o ft he announcement of the Elk City sale. Cooperman improperly sought APL Executive 1’s assurance that APL Executive 1 had not shared confidential information with him in advance ofthe announcement of the Elk City sale, despite knowing this was not true. APL Executive 1 believed that Cooperman was attempting to fabricate a story in case the two were questioned about their conversations regarding Elk City. 58. In late 2011, Cooperman also informed APL Executive 3 that the Commission had sent Omega a subpoena relating to APL trading in advance ofthe announcement ofthe Elk City sale. Cooperman told APL Executive 3 to tell APL Executive 1 that Cooperman and APL Executive 1 had not discussed confidential information related to the Elk City sale prior to the time APL publicly announced it.”
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