FAT CATS

[CheezyTang]

serf..one of my favs...PDC (pioneer drilling)

AP
SEC Settles With Hedge Fund Adviser
Monday March 19, 12:05 pm ET
Hedge Fund Adviser Settles With SEC for $120,000 to End Short-Selling Case


WASHINGTON (AP) -- Former hedge-fund manager Imperium Advisors LLC has agreed to pay almost $120,000 to settle charges that it violated securities rules when it used shares it had bought in three public offerings to cover short sales placed just days earlier.



The Securities and Exchange Commission said Friday that Imperium had bought Pioneer Drilling Co., Premcor Inc. and Houston Exploration Co. stock in 2004 in three separate offerings. Under securities laws, the hedge-fund adviser was restricted from using such stock to cover short sales made five days before the newly issued securities were priced.

Imperium funds made $41,328 through its Pioneer short sales and $33,864 on its Premcor short sales, the SEC said. The agency didn't say whether Imperium had profited on its Houston Exploration trades.

"Hedge-fund advisers must follow the rules concerning short sales, and if they don't, we will take appropriate action," said Bruce Karpati, assistant enforcement director at the SEC's Northeast regional office.

A phone number for Imperium's offices was out of order, and Imperium officers couldn't immediately be located.

Short selling involves selling borrowed shares in the hopes of buying back the securities when prices are lower, pocketing the difference. By engaging in short selling just before the price of new shares is set, an investor is sometimes able to sell at prices higher than what it would later pay for the newly offered shares.

SEC rules ban using stock sold through such public offerings to cover recently placed short sales, in an effort to prevent traders from lowering stock prices. The SEC says that such improper short sales may artificially lower the price for the securities being offered, harming the company offering the shares.


http://biz.yahoo.com/ap/070319/sec_hedge_fund.html?.v=1