The Securities and Exchange Commission slapped billionaire hedge fund founder Leon Cooperman with insider trading charges on Wednesday, saying he made “illicit profits” on trades based on confidential information.
Cooperman and Omega Advisors — the fund he founded in 1991 — profited off of trades made based on details learned as one of the largest shareholders of Atlas Pipeline Partners, officials say.
According to the SEC’s complaint, Cooperman and Omega bought up Atlas Pipeline securities despite agreeing not to use confidential, non-public information about an upcoming sale of an Atlas natural gas processing plant in Elk City, Okla. When the sale was announced, Atlas shares soared 31%, the SEC says.
When the SEC subpoenaed Omega about the trades, Cooperman contacted an Atlas executive to make up a story to tell if questioned about the activity, the SEC alleges.
The Atlas executive “was shocked and angered” upon learning Cooperman had made trades in advance of the sale’s announcement, the SEC says.
“We allege that hedge fund manager Cooperman, who as a large APL shareholder obtained access to confidential corporate information, abused that access by trading on this information,” said Andrew Ceresney, the director of the SEC’s enforcement division, in a statement.
“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.”
The SEC complaint also alleges Cooperman violated federal securities laws more than 40 times by failing to report information about holdings and transactions in securities of publicly traded companies that he beneficially owned in a timely matter.
Cooperman maintains that he is innocent. “The insider trading allegations against Mr. Cooperman are entirely baseless,” said his attorneys at Paul, Weiss, Rifkind, Wharton & Garrison in New York in a statement sent to USA TODAY. “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.”
Before founding Omega Advisors, Cooperman spent 25 years at Goldman Sachs, where he became a general partner and was Goldman Sachs Asset Management chairman and CEO.