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Leon Cooperman Settles With SEC on Insider Trading Charges

Under the settlement, Omega will be required to maintain an on-site independent consultant who will be able to access the firm’s trading records.

Leon Cooperman and his hedge fund Omega Advisors have agreed to pay almost $5 million to settle insider trading charges, according to the Securities and Exchange Commission.

Under the settlement, Omega will be required to maintain until 2022 an on-site independent consultant who will be able to access trading records and electronic communications without prior notice to the firm, the SEC said in a May 18 statement. The consultant can recommend improvements and conduct training, and will report to the SEC.

In September 2016, the SEC filed a complaint alleging that Cooperman and Omega had “generated significant illegal profits” in 2010 by trading in Atlas Pipeline Partners based on insider information from an Atlas Pipeline executive, who told Cooperman the company planned to sell one of its significant assets. The SEC complaint stated that even though the executive warned Cooperman not to trade based on the information, Cooperman began purchasing the company’s stock in advance of the announcement of the sale.

Cooperman and Omega made no admission nor did they deny any wrongdoing as part of the settlement, said the firm’s attorney Daniel Kramer of Paul, Weiss, Rifkind, Wharton & Garrison.

Omega Advisors’ assets have dropped to $3.6 billion as of April 30, from $6.7 billion at the start of 2016.

The New York hedge fund firm gave a presentation to at least one institutional investor regarding the allegations, meeting with the City of Milford, Connecticut’s Pension and Retirement Board on Oct. 20, 2016, according to the meeting minutes. An Omega representative described the allegations from the SEC during the meeting and stated the firm had not done anything wrong, said Christopher Cody, chair of the City of Milford’s pension and retirement board.

Cody said he and the board were satisfied with Omega’s responses that the investigation would not distract the firm from its investment process.

“We didn’t feel that it was prudent to withdraw from the fund at the time, and we felt we should wait to see how it played out,” Cody said, adding that since the investigation has been resolved, the board may consider increasing its investment with Omega in the future.

The City of Milford’s pension, which has about $330 million in assets, currently has $19 million invested with Omega, said the fund’s investment consultant John-Oliver Beirne at Beirne Wealth Consulting.

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