CCH Wall Street – 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.â€Â
