The Securities and Exchange Commission has charged a hedge fund firm and its founder with illegally reaping more than $1.3 million of gains from a short-selling scheme designed to drive down the stock price of Ligand Pharmaceuticals.
Lemelson Capital Management and founder Gregory Lemelson allegedly issued false information about Ligand after taking a short position in the company through his hedge fund firm Amvona Fund in 2014, according to an SEC statement Wednesday. The regulator said that Ligand’s shares lost more than a third of their value during the course of the alleged scheme.
“While short-sellers are free to express their opinions about particular companies, they may not bolster those opinions with false statements, which is what we allege Lemelson did here,” David Becker, an assistant director in the SEC’s division of enforcement, said in the statement.
Lemelson, 42, allegedly carried out the fraudulent scheme by publicly disseminating a series of false statements about Ligand through research reports and interviews, according to the SEC’s complaint.
Lemelson, who is chief investment officer of Lemelson Capital Management and a Greek Orthodox priest, denied the allegations in a statement Wednesday.
“The Commission chose to bring this case based upon its enforcement staff’s personal feelings and facts be damned, win-at-any-cost ambitions which have allowed it to ‘make up the rules’ as they go along,” the CIO — who goes by Rev. Fr. Emmanuel Lemelson — said in the statement. “The government’s claims are false and will be proven to be so.”
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According to the CIO’s statement, the SEC’s action is an effort to “destroy the reputation of a whistleblower” who provided accurate and critical information about an alleged massive accounting fraud at Ligand. He said Ligand was sued in July for $3.8 billion by a group of investors that included Citadel.
“We are looking forward to defending this matter, exploring the possibility of bringing a complaint against the SEC and to setting a precedent that will prevent this sort of meritless action from being brought in the future,” Lemelson said.
