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Posted by: eatyourshortsms
In reply to: jrdig7 who wrote msg# 27520
Date:1/10/2007 1:31:30 PM
Post #of 27523

Jeff, Try this again! If not I included the article!

http://www.marketwatch.com/news/story/story.aspx?siteid=mktw&guid={26315171-03F1-485E-BFC7-B58F5....

Sandell gets Wells Notice from SEC: sources
Hedge-fund firm probed over possible 'naked' short selling, report says
PrintE-mailDisable live quotesRSSDigg itDel.icio.usBy Alistair Barr, MarketWatch
Last Update: 3:35 PM ET Nov 1, 2006


SAN FRANCISCO (MarketWatch) -- Sandell Asset Management, a big hedge-fund firm that trades on the outcome of mergers and acquisitions, could face a civil lawsuit from the Securities and Exchange Commission over its trading in shares of lender Hibernia Corp., according to two people familiar with the situation.
Sandell, a New York-based firm that oversees the $4.5 billion Castlerigg Master Investments fund, received a so-called Wells Notice from the SEC recently, the sources said, on condition of anonymity.
A Wells Notice apprises recipients that the SEC staff has recommended civil legal action and gives them a chance to respond before the agency moves forward.
A representative at Sandell didn't return a phone message left Wednesday afternoon seeking comment.
The SEC has been probing Sandell's alleged use of "naked short selling," Bloomberg News reported Wednesday, citing unidentified investors who said they had received a letter from the firm explaining the situation.
In a typical short sale, traders sell borrowed shares and then -- if all goes according to plan - buy them back at a lower price and return them to the lender. The difference is kept as profit.
In naked shorting, a trader shorts a stock without first making necessary arrangements to borrow shares. That means the seller often fails to deliver the stock to the buyer and the trade can't be settled, running afoul of securities laws.
Naked short selling has become the focus of a looming legal battle this year between short sellers and law firms representing companies that claim they've been the victims of improper trading. See full story.
Regulators, such as the National Association of Securities Dealers, have been cracking down on naked short selling this year.
If the SEC takes action against Sandell it would be the agency's first naked-short-selling case since Chairman Christopher Cox spoke out against the practice during a speech in July, Bloomberg noted.
Sandell was founded in early 1998 by Thomas Sandell, a former Bear Stearns (BSC : The Bear Stearns Companies Inc
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1:09pm 01/10/2007

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BSC165.40, +0.15, +0.1%) risk-arbitrage trader who was once a top-ranked badminton player in his native Sweden.
While trading on the outcome of mergers and acquisitions, the firm sometimes takes activist positions to spark financial and structural changes at companies. Sandell joined Nelson Peltz's Trian Group in its proxy battle against H.J. Heinz (HNZ : H.J. Heinz Company
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