redman..these people know where the money ended up, you just never hear them STATE THE OBVIOUS!! look at this case..these companies were destroyed the same way that thousands of other companies were victimized AND he asks WHERE IS THE MONEY!!
SOUND FAMILIAR???
it goes like this...a crime was committed(by hedge funds), problem is it took the law enforcement(SEC) 6 years to capture the RAPIST, when they knew what he did(NAKED SHORTED THE PIPE DEAL) and where he was AFTER he commited the crime...the problem is the VICTIM(IE:company) has been MURDERED(BANKRUPT or trading in the sub-pennies)!!
fine the hedge fund manager..who benefits from this companies already destroyed..have him pay back his ill-gotten gains(DO VICTIMIZED SHAREHOLDERS SEE A PENNY OR THE COMPANY?)
SEC Fines Fund Manager for Illegal PIPE Trades By Matthew Dublin
January 23, 2007
The SEC has settled fraud charges against a former portfolio manager at a New York-based hedge fund for an illegal trading scheme involving three PIPE offerings.
Joseph J. Spiegel, 35, agreed to settle charges that he engaged in illegal short sales of three separate PIPE offerings on behalf of his former employer, the Spinner Global Technology Fund. Without admitting or denying the allegations, Spiegel consented to a $110,000 civil penalty, as well as an injunction against future violations of federal securities laws. He has also agreed to a three-year ban barring him from associating with an investment advisor.
After agreeing to invest in the PIPE deals, Spiegel allegedly sold short the issuers’ public stock through naked short sales in Canada. He then allegedly used the fund’s PIPE shares to close out the short positions in direct violation of securities laws, stated the SEC.
“To avoid detection and regulatory scrutiny, Spiegel employed wash sales and matched orders to make it appear that he was covering (the Spinner Global Technology Fund’s) pre-effective date short positions with open market stock purchases,” the SEC claimed. “In fact, the covering transactions were not done with open markets shares because the hedge fund was on both sides of the trades and covered the short position with its PIPE shares.”
The three PIPE issuers involved in the illegal trades were Hypercom Corp., Novatel Wireless, and Tripath Technology. Spiegel used the same basic scheme in all three offerings, according to the Commission’s complaint.
The Tripath Technology scheme typified the defendant’s strategy of establishing and covering short positions with PIPE shares. According to the Commission, on January 25, 2002, Spiegel, on behalf of the hedge fund, invested $2,000,000 in a Tripath Technology PIPE offering. In the deal, the fund received 66,667 restricted Series A Preferred stock shares at $30 per share. Each Series A Preferred stock converted into 20 shares of common stock, resulting in a discount of 33% from Tripath’s current market price of $2.22 per share.
To take advantage of that sizable discount, Spiegel then sold short 362,300 common shares before the Commission declared the resale registration statement of the PIPE shares effective. Once the resale registration statement went into effect, he allegedly worked with a Canadian broker-dealer to complete those pre-effective short sales as cheaply as possible, stated the complaint.
Spiegel made the fund’s short positions in Canada because it did not own unrestricted shares and did not wish to incur the cost of borrowing such shares, charged the SEC. The lack of borrowing limitations, combined with the use of its PIPE shares to unlawfully close the pre-effective date short positions, enabled the hedge fund to net much larger profits than if it had adhered to PIPE securities regulations, charged the complaint.
To carry out his scheme, Spiegel allegedly coordinated the matched trades with the Canadian broker-dealer via phone calls and instant messaging, telling it to sell a specific number of PIPE shares from the fund’s domestic brokerage account at a particular price and time. The Canadian broker was then instructed to buy the same number of shares at the same time and price using the same broker, stated the complaint. The broker, on the fund’s behalf, would then allegedly close out the Canadian short positions using the PIPE shares that had been purchased from the fund’s domestic account, charged the Commission.
In all three cases, Spiegel told the issuers that the fund was purchasing the shares for its own account, omitting the very important fact that it intended to sell the securities.
“This representation was material to the PIPE issuers, who, as the securities purchase agreements made clear, relied on the investors’ representation in order to qualify for an exemption from the registration requirements for their private offering,” stated the SEC. “However, at the time Spiegel signed the securities purchase agreements on behalf of the hedge fund, he intended to distribute the restricted PIPE securities in violation of the registration provision of the Securities Act.”
The regulator acknowledged the assistance of the Investment Dealers Association of Canada in the investigation.
In late December of 2006, the Commission instituted proceedings against the Spinner Global Technology Fund and its investment advisor, Spinner Asset Management, LLC, for the illegal short sales. According to the proceeding, the fund netted $361,437 in ill-gotten gains through the PIPE trades Spiegel conducted. Spinner Asset Management agreed to a $60,000 civil penalty, and the fund was ordered to pay $361,437 in disgorgement and $74,159 in prejudgment interest.
This case marks one more in a string of illegal PIPE trading activity pursued by industry watchdogs. Earlier this year, the SEC fined investment firm Friedman, Billings, Ramsey & Co. $7 million over charges of improper trading involving the Compudyne PIPEs deal. In November of 2006, the NASD fined EKN Financial Services $200,000 for improper short selling involving three PIPE offerings. In addition to the fine, the firm also consented to a six-month PIPE transaction suspension.
who benefits now and who are the true victims??
