U.S. Judge Rejects Bid By Omega’s Cooperman To Dismiss Insider Trading Charges

Mar 20 2017 | 11:20pm ET

A bid by Omega Advisors CEO Leon Cooperman to dismiss insider trading charges by the U.S. Securities & Exchange Commission were rejected by a federal judge on Monday.

Without ruling on the merits of the case, U.S. District Court Judge Juan Sanchez determined that the SEC presented a “plausible claim” in pleadings before him and allowed the case to proceed, potentially setting up a trial for later this year. 

Cooperman, a billionaire and one of the most successful hedge fund managers in the industry, received a Wells notice from the SEC in March 2016 and insider trading charges against him and Omega subsequently followed in late September. The allegations, which Cooperman has strenuously denied, revolve around Omega’s 2010 investments in Atlas Pipeline Partners in which profits of more than $4 million were allegedly earned based on information received from an Atlas executive.

In rejecting the dismissal request, Judge Sanchez wrote that the SEC had successfully argued the “who, what, when, where, and how” of the alleged misconduct such that a “plausible misappropriation” of inside information could have taken place, according to a Reuters report. No specifics were immediately available about when the matter might go to trial. 

The case has already damaged Omega, whose AUM has fallen from as much as $5.2 billion at the start of 2016 to $3.4 billion in January of this year. Cooperman, a former partner at Goldman Sachs and the son of a Bronx plumber, was one of the few large hedge fund managers to publicly recommend investors “hang tough” in January 2016 as stocks embarked on their worst annual start in recent memory. A pervasive bear market in stocks, he said at the time, was unlikely – just a few months before the U.S. stock market began its recent record-setting ascent.

The case is SEC v Cooperman et al, U.S. District Court, Eastern District of Pennsylvania, No. 16-05043.

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