Leon Cooperman charged with insider trading by SEC

[KJP]

https://www.sec.gov/news/pressrelease/2016-189.html

[eclecticvalue]

Now this is real drama and very shocking!!!!

[Guest]

Well I suppose if someone isn't a great market forecaster, there are other ways to become a billionaire.

 

http://archive.fortune.com/2007/12/10/news/newsmakers/benner_cooperman.fortune/index.htm?postversion=2007121104

[oddballstocks]

Wow!  Usually these insider trading cases are political witch hunts, but this seems fairly cut and dry.

 

Cooperman spoke with an exec who shared confidential non-public details and was asked to not trade on them.  Cooperman agreed but traded anyways.  Then when questioned by the SEC Cooperman attempts to fabricate a story.

 

I know a lot of people like to talk to management, but there is a caveat emptor type situation with it.  Executives don't really know what's public or what isn't, or what is or isn't material.  Some management plays it very safe and only parrots PR releases.  But other managers will share anything and everything.  I had heard a story about one smaller company where the CEO told an investor he planned on retiring and selling the company in a few years, a plan he hadn't communicated to any other shareholders.

[Uccmal]

Good opportunity for him to quit smoking while he is in prison.

 

Kind of ruins his reputation as a great investor.  Why, oh, why? 

 

 

[ourkid8]

Guys, everyone is innocent until proven guilty.  Let's not jump the gun. 

[Hielko]

Guys, everyone is innocent until proven guilty.  Let's not jump the gun. 

Sure, but seems like a pretty clear case to me. Pretty stupid.

[Uccmal]

Guys, everyone is innocent until proven guilty.  Let's not jump the gun.

 

yeah but,  I worked 15 years for a government enforcement branch.  There is a huge space between between being investigated and being charged.  We virtually never prosecuted unless the case was very clear.  Whomever at the SEC who has charged Omega would have had to prove their case to the heads of the agency to proceed with charges, given Cooperman's high profile. 

[Travis Wiedower]

But other managers will share anything and everything.  I had heard a story about one smaller company where the CEO told an investor he planned on retiring and selling the company in a few years, a plan he hadn't communicated to any other shareholders.

 

The Cooperman case and your example seem very obvious, but there is such a large grey area with this stuff. I've had one or two experiences talking to management where they said something that left me thinking "I'm pretty sure that's non-public and it seems material, but I really don't know for sure." I imagine this is more common in small caps because execs aren't as groomed on correct behavior.

 

As an even more obvious example, just last month I met someone at an event, told him I was an investor, and he immediately says "Oh I work at x, you should buy their stock, we have [large announcement] coming out in a couple weeks." I was just like "really? I'd rather not know that stuff." It kind of annoyed me honestly.

 

Disclaimer: I did not purchase x's stock :)

[ragu]

Sure, but seems like a pretty clear case to me. Pretty stupid.

 

Unbelievably stupid.

 

I will never understand the motivation of something like this. And to do it at the fag end of one's career? How on earth do you turn rogue right at the end?

 

Best,

Ragu

[writser]

As Picasso pointed out on Twitter the most amazing thing is that he made only a couple of million trading APL. He's already worth 10 digits. Why the **** would you starting fooling around making super-obvious option trades for a sum that hardly moves the needle?

 

So he's a billionaire and will probably find a way to settle this thing but if you read the complaint (link) you can't help but think it is super clear cut. And that Cooperman is incredibly shortsighted, stupid and greedy.

[KJP]

Good opportunity for him to quit smoking while he is in prison.

 

Kind of ruins his reputation as a great investor.  Why, oh, why?

 

The SEC only has civil enforcement powers, meaning fines, disgorgement and injunctive relief, e.g., director-officer bars.  It does not have criminal enforcement powers and cannot put people in jail.  A criminal prosecution would be brought by the DOJ or a U.S. Attorney, or, in theory, a state prosecutor.  It remains to be seen whether a criminal indictment is coming. 

[KJP]

How on earth do you turn rogue right at the end?

 

 

It's quite charitable to assume that this type of behavior only occurred "right at the end." 

[TwoCitiesCapital]

How on earth do you turn rogue right at the end?

 

 

It's quite charitable to assume that this type of behavior only occurred "right at the end."

 

+1

[DonFanucci]

Amazing how many experts on this case there are here.

[oddballstocks]

Amazing how many experts on this case there are here.

 

On the Internet everyone is an expert! 

[ragu]

It's quite charitable to assume that this type of behavior only occurred "right at the end."

 

Fair enough. I guess there's never really been anything, that I have seen, about him or the firm in terms of shadiness. With SAC and Cohen, for e.g., it was only a question of whether the prosecutors were going to have enough evidence.

 

This is a surprise. To me, at any rate.

 

Best,

Ragu

[Guest cherzeca]

sometimes, prosecutor's witnesses are creeps copping plea.  here, the witness is the ceo who feels cooperman betrayed him.  this is a case prosecutors will want to bring to trial.

 

"According to the SEC’s complaint, when Omega Advisors received a subpoena nearly a year-and-half later about its trading in APL securities, Cooperman contacted the executive and tried to fabricate a story to tell if questioned about this trading activity.  The executive was shocked and angered when he learned that Cooperman traded in advance of the public announcement."

 

[arcube]

From Wikipedia. Very interesting!

 

In November 2011 Cooperman gained attention for an open letter to U.S. President Barack Obama in which among other things charged the president with engaging in class warfare.[34][35] This letter has been characterized by Joseph Palermo of The Huffington Post as a rant bemoaning the mistreatment of billionaires by the president and his "minions" (Cooperman's word).[36]

[Travis Wiedower]

"the mistreatment of billionaires" lol

[dyow]

Wasn't he offered the option to settle?

 

If you are a billionaire and guilty of something why wouldn't you pay a few million to quietly settle the issue?

 

innocent.

 

[BTShine]

I have no idea, yet one reason people don't settle is hubris.  It affects many people in many different ways.

[DonFanucci]

"the mistreatment of billionaires" lol

 

People think that because billionaires are rich that they can be maligned, and there's never anything unjustly said about or done to them, or if there is, that it doesn't matter because they're rich. I think that's ridiculous. We owe our modern way of life to businessmen, including billionaires, and they receive no praise for it. Quite the opposite, and this is a good example. We have here a man with a storied career as a great investor and by all accounts I've seen, a great man. Yet it's already assumed by many here that he's guilty before it's proven in a court of law, and that he has been doing this for many years despite no evidence at all for that. He chose not to settle which indicates he thinks he's innocent, and that's interpreted as potential hubris.

 

Who else in society is treated this way? Name another group of people that is 1) assumed guilty until proven innocent 2) is constantly the scapegoat for the problems created by others (housing bubble, etc) 3) is forced to operate under non-objective laws that in many cases are impossible to know whether you have broken or not (insider trading being one) 4) is penalized for success (anti-trust against Microsoft/Alcoa/Google/etc)

[Uccmal]

"the mistreatment of billionaires" lol

 

People think that because billionaires are rich that they can be maligned, and there's never anything unjustly said about or done to them, or if there is, that it doesn't matter because they're rich. I think that's ridiculous. We owe our modern way of life to businessmen, including billionaires, and they receive no praise for it. Quite the opposite, and this is a good example. We have here a man with a storied career as a great investor and by all accounts I've seen, a great man. Yet it's already assumed by many here that he's guilty before it's proven in a court of law, and that he has been doing this for many years despite no evidence at all for that. He chose not to settle which indicates he thinks he's innocent, and that's interpreted as potential hubris.

 

Who else in society is treated this way? Name another group of people that is 1) assumed guilty until proven innocent 2) is constantly the scapegoat for the problems created by others (housing bubble, etc) 3) is forced to operate under non-objective laws that in many cases are impossible to know whether you have broken or not (insider trading being one) 4) is penalized for success (anti-trust against Microsoft/Alcoa/Google/etc)

 

Your first statement is totally fair.  I think he deserves the benefit of the doubt. 

 

Your second paragraph is inaccurate on so many levels. 

Who else in society is treated this way?

A great many people:  Minorities in any culture;  The poor and disenfranchised everywhere; the disabled; I could go on.  Life is more fair for Mr. Cooperman; Mr. Gates; and Page/Brin than it is for many.  All that is at stake for Mr. Cooperman is his reputation.  For the poor and disenfranchised their very lives and health are often at stake. 

 

Usually it is the poor, blacks, immigrants, etc. who are the scapegoats.  The rich and successful seldom take it on the chin, as we saw during, and after the financial crisis, and see repeated with regularity.  Wells Fargo is a real time example. 

 

Ask anyone who needs legal aid if the legal system is fair.  The law always caters to the wealthy.  A recent example is the spoiled rich Us frat boy who looks like he will walk after a date rape case. 

 

Penalized for success: You have really reached with this one.  Antitrust regulations exist to protect people from monopolistic situations.  Monopolistic situations are not healthy for an economy.  It was a very real problem and if not kept in check could be a problem again.  Corporations are not benevolent, even ones whose mission statement is "Dont be Evil". 

 

 

 

 

 

[ragu]

[...]I think he deserves the benefit of the doubt. 

 

I can only assume you haven't read the link to the complaint posted earlier in this thread.

 

To recap:

 

Net seller of APL securities until conversations with exec beginning July '10. Was provided information about upcoming asset sales and told not to trade on that info.

 

Purchases began after first conversation, including significantly out of the money short-term call options.

 

Attempted to influence exec when faced with a subpoena from the SEC.

 

Seems pretty clear cut to me.

 

Best,

Ragu