The Morning Brief: SEC Charges Another Former SAC Capital PM
The Securities and Exchange Commission has charged another former employee of Steven Cohen’s SAC Capital Advisors with insider trading. Ronald Dennis, a former analyst at SAC affiliate CR Intrinsic Investors, agreed to be barred from the securities industry and pay more than $200,000 to settle SEC charges that he engaged in illegal insider trading of two technology companies, Dell Inc. and Foundry Networks. Dennis received illegal tips from two friends who were also hedge fund analysts, according to the regulator, which charges that one of those friends was Jesse Tortora, who was then an analyst at Diamondback Capital and whom the SEC claims relayed illegal tips about Dell’s financial performance.
Tortora and Diamondback were charged in 2012, along with several other hedge fund managers and analysts, as part of the SEC’s probe of expert networks and hedge funds. Dennis also received an illegal tip related to an impending acquisition of Foundry from Matthew Teeple, an analyst at hedge-fund firm Artis Capital Management. The SEC charged Teeple and two others last year for insider trading in Foundry stock.—The American Federation of Teachers continues to turn up the heat on hedge funds and other financial firms that oppose defined benefit pension plans. The union updated its hit list of 29 managers who manage DB plans but at the same time are helping or supporting organizations that “are attempting to eliminate these very same pension plans,” according to a Pensions & Investments report. On its recently updated list, the AFT added Highbridge Capital Management, noting that chairman Glenn Dubin has contributed to the activities of StudentsFirstNY, which supports charter schools, merit-based pay and ending laws mandating seniority-based layoffs. Other hedge funds on the AFT’s list that are involved with StudentsFirstNY include Paul Tudor Jones, chairman and CEO of Tudor Investment Corp., and Daniel Loeb, founder and CEO of Third Point. Also on AFT’s list: David Tepper’s Appaloosa Management, Paul Singer’s Elliott Management, Mark Kingdon’s Kingdon Capital Management and Julian Robertson Jr.’s Tiger Management.—Pershing Square Capital Management’s William Ackman enjoyed the best of both worlds on Thursday on the long and short sides of his portfolio. On a day when the overall stock market tanked by more than 1 percent, the New York–based hedge fund manager saw Fannie Mae shares surge nearly 5 percent and Freddie Mac shares climb more than 8 percent after dropping 40 percent or so over the previous two-day period. Meanwhile, shares of Herbalife, Ackman’s huge short position, fell more than 5 percent and are now down nearly 30 percent since early January. —Shares of former Ackman holding J.C. Penney finished down nearly 2 percent Thursday after rising as much as 3 percent earlier in the day. The stock is still up 67 percent since bottoming on February 24.—Ken Griffin’s Citadel disclosed that it holds a 5.4 percent passive position in Arch Coal.