New York – Federal regulators have accused high-profile hedge fund manager Leon Cooperman and his firm of illegally trading on confidential information he learned from a company executive.
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The Securities and Exchange Commission announced the civil insider-trading charges Wednesday against Cooperman and his firm, Omega Advisors. The SEC also alleged that Cooperman tried to cover up the misconduct. Cooperman, 73, who is well known in Wall Street circles and appears frequently on the CNBC business cable network, is disputing the allegations.
The SEC indicated it was sending a message that well known and wealthy people aren’t exempt from its efforts to pursue insider trading.
The allegations against Cooperman are “entirely baseless,” his attorneys Ted Wells and Dan Kramer said in a statement. “Mr. Cooperman acted appropriately at all times and did nothing wrong. We intend to vigorously defend against the charges and will not allow the SEC to tarnish the legacy Mr. Cooperman has built over the course of a legendary career spanning five decades.”
The SEC said Cooperman profited illegally in July 2010 by buying securities in Atlas Pipeline Partners in advance of the sale of its natural gas processing facility in Oklahoma, using his status as one of the company’s biggest shareholders to get the information from the senior executive. After the announcement of the $682 million sale, Atlas Pipeline shares soared more than 31 percent.
The executive, who wasn’t named, had believed that Cooperman would hold the information in confidence and not trade on it — as Cooperman had explicitly agreed to do, according to the SEC.
In its lawsuit filed in federal court in Philadelphia, the SEC also said Cooperman tried to conceal the insider trading. When Omega Advisors received a subpoena from the SEC about a year and a half later demanding information on its trading in Atlas Pipeline stock, Cooperman contacted the company executive and tried to give the executive a concocted story to tell, the SEC said.
The agency is seeking unspecified restitution of profits from the trading and money penalties from Cooperman and Omega. It wants Cooperman barred from any position as an officer or director.
Cooperman abused his access to executives as a large shareholder by trading on the confidential information, SEC Enforcement Director Andrew Ceresney said. “By doing so, he allegedly undermined the public confidence in the securities markets and took advantage of other investors who did not have this information.”
Ceresney told reporters in a conference call that the SEC “will continue to pursue relentlessly those who engage in insider trading, regardless of their status or resources.”
Cooperman, who lives in Boca Raton, Florida, founded Omega in 1991 after working as a senior executive at Goldman Sachs. Omega has about $5.4 billion in assets under management, according to the firm.
In addition, the SEC said, Cooperman starting in 2010, repeatedly failed to file on time, or at all, required reports on his holdings and transactions in the securities of eight public companies.
Cooperman was the first in the country to endow Birthright Israel, a program that sends Jews aged 18–26 on free short-term visits to Israel to promote Jewish identity.
In an interview in 2010 with The New Jersey Jewish News (NJJN) Cooperman said: “We are very proud of our religion, our heritage, the many accomplishments of the Jewish people, and the enormous contribution they make to society. But we are very concerned about the pace of assimilation and really the disappearance of the Jewish religion. Through intermarriage and rapid assimilation, we’re disappearing. We’re trying to make our effort to help either slow that down or reverse it.”
What makes him prominent?