The lawsuit filed in U.S. District Court in Manhattan claims his funds made $1.34 million after profiting from inside information provided by Peter Black, a GE Capital analyst. Black received the tip from Thomas Strickland, 33, who was an employee of GE Capital and had access to confidential documents regarding the merger.
The suit claims that with prior knowledge of the merger of Allied Capital Corp and SunSource Inc., Obus directed the purchase of 287,200 shares of SunSource stock at $4.75 on June 8, 2001, according to the SEC complaint.
In a press release yesterday to investors, Obus and Wynnefield denied the charges and called the allegations “absolutely baseless.†The letter noted Wynnefield had invested in SunSource prior to the deal and had been working with them for over ten years.
“This smacks of heavy-handed regulatory over-reaching of the type that’s been so much in the news lately,†the letter said.
“The allegations are totally baseless and we will prove that in court,†said Joel Cohen in an interview with Reuters. Mr Cohen is an attorney in New York representing Obus and the Wynnefield funds.
The SEC is seeking reimbursement of the illicit gains plus civil penalties. It also seeks to prohibit Obus and Black from serving as officers or directors of public companies.
Alex Akesson
Contributing Writer
HedgeCo.Net
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