Hedge-fund operators must pay settlement for illegal stock trading News
Hedge-fund operators must pay settlement for illegal stock trading

[JURIST] Three hedge-fund managers must pay $2.4M to settle charges that the companies used illegal stock trading tactics to profit off 22 other companies. Galleon Management LP, Oaktree Capital Management LLC and DB Investment Managers Inc. were alleged by the US Securities and Exchange Commission [official website] to have violated Rule 105 [text], an anti-manipulation rule that the SEC says

prohibits covering a short sale with securities obtained in a follow-on offering if the short sale occurred within five business days before the pricing of that offering. The rule is designed to prevent funds from improperly profiting by selling short with the expectation that they will cover that short position with lower priced shares obtained from the offering. Such short sales can play a major role in contributing to a decrease in a follow-on offering’s share price, and can ultimately reduce an issuer’s proceeds from the deal by millions of dollars
. According to an SEC press release [text] issued Thursday,
in total, the respondents had violated Rule 105 in connection with twenty-two follow-on offerings of seasoned issuers, resulting in ill-gotten gains in the amount of $1,040,882 for Galleon, $169,773 for Oaktree and $15,585 for DB Investment Managers. On some occasions, Galleon and Oaktree engaged in so-called “sham” transactions. In these situations, funds created large short positions within the Rule 105 restricted period, purchased shares in a follow-on offering and then engaged in further transactions or trading practices to make it appear that the trading complied with Rule 105, when in fact it did not.
The companies were ordered to pay back the money obtained illegally as well as pay civil penalty fines of up to $870,000. AP has more.

THIS DAY @ LAW

Terrorists launch airplane attacks on major US targets

On September 11, 2001, terrorists allegedly associated with al Qaeda hijacked four US commercial airliners, two of which were crashed into the World Trade Center Towers in New York City, with a third hitting the Pentagon in Washington DC. The fourth plane went down in a field near Shanksville, Pennsylvania. The attacks spawned an immediate tightening of aviation security regulations and in October 2001 led to Congressional passage of the controversial USA PATRIOT Act, giving the executive broad new national security powers.

Israel and Egypt agree to peace deal

On September 11, 1978, Prime Minister Menachem Begin of Israel and President Anwar Sadat of Egypt agreed to the Camp David Accords, a plan for peace between the two countries. This led to the signing of the Israel-Egypt Peace Treaty. U.S. President Jimmy Carter played a major role in the negotiations.

Starr Report detailing case for Clinton impeachment delivered to Congress

On September 11, 1998, Whitewater independent counsel Kenneth Starr delivered an extensive report to Congress accusing President Clinton of 11 possible impeachable offenses - including perjury, obstruction of justice, tampering with witnesses and abuse of his powers of office - in connection with his relationship with former White House intern Monica Lewinsky. Within minutes of its much-anticipated release on the Internet, JURIST carried the report here.