Leon Cooperman Charged With Insider Trading

Earlier, the Securities and Exchange Commission alleged that Cooperman, 73, and his $5.4 billion hedge fund Omega Advisors traded illegally on private information six years ago.

In its lawsuit filed in federal court in Philadelphia, the SEC also said Cooperman tried to hide the insider trading.

The commission’s press statement on the issue alleges that Cooperman reaped “illicit profits” when he bought APL shares en masse ahead of the firm’s sale of a natural gas processing facility in Elk City, Oklahoma.

“Members of the investing public who traded APL securities at the same time as Cooperman and Omega were harmed because Defendants gained an advantageous market position through their misappropriation and use of material nonpublic information”, the SEC complaint said. “I won’t take questions as much as I’m dying to”, Cooperman said adding that he is confident “we will prevail” in fighting the charges.

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.

The SEC also alleged that Cooperman urged the executive to tell a fabricated story if asked about the fund manager’s trading activity. When the sale was announced, the stock jumped by 31%, the SEC said, benefiting Omega Advisors.

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. When APL did announce the sale of the facility, the company’s stock price leaped to more than 31 percent.

“Needless to say, we are highly disappointed with the Commission’s decision to file charges, and we strongly disagree with the Commission that either the firm or I have engaged in any unlawful conduct”, Cooperman wrote. The government said Cooperman had trimmed his bet in APL in the first half of 2010 and called it a “shitty business” on July 7, 2010.

Cooperman told clients in a letter dated March 21 that he and his firm received a Wells notice regarding an investment in a single issuer that it had since 2007, according to a person familiar with the matter at the time.

Attorneys representing Cooperman and Omega didn’t immediately return calls seeking comment.

In addition, the SEC claims that Cooperman violated securities laws by not disclosing information about his holdings in a timely manner on more than 40 occasions.

The SEC is demanding repayment of “ill-gotten gains plus interest [and] penalties”, as well as permanent injunctions against Cooperman and Omega.