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Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation?
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To: rrufff who wrote (870)3/14/2006 9:40:33 PM
From: rrm_bcnu   of 5034
 
SEC settles with hedge funds over 'Pipe' trades

By John Spence, MarketWatch
Last Update: 3:24 PM ET Mar 14, 2006

BOSTON (MarketWatch) -- The Securities and Exchange Commission said Tuesday it has reached a settlement with three New York-based hedge funds over charges related to illegal trading in connection with so-called Pipe offerings.
The agency alleges the trio -- Langley Partners, North Olmsted Partners and Quantico Partners -- carried out a scheme to evade registration requirements of federal securities laws for 23 unregistered securities offerings, known as private investment in public equity or "Pipes," and engaged in insider trading.
The SEC said hedge fund Langley Partners will disgorge $8.8 million in ill-gotten gains and prejudgment interest. Meanwhile, Langley Partners and Jeffrey Thorp, the portfolio manager for the funds, will pay civil penalties totaling $7 million.
A Pipe is an offering where accredited investors -- those with at least $1 million -- are allowed to purchase stock in a public company, generally at a discount. The stock can only then be sold to the public after the shares are registered with the SEC.
The regulator alleges the hedge funds and Thorp typically sold short the issuer's stock, often through "naked" short sales in Canada. Naked shorting is the controversial practice of going short on a stock without first borrowing the shares.
The funds and Thorp settled the charges without admitting or denying the allegations, the SEC said.
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