Post by sandi66 on Sept 14, 2007 8:34:05 GMT -5
reposted from RB (jcline)
SEC v 10 defendants in unlawful trading scheme.
www.sec.gov/litigation/complaints/2007/comp20278.pdf
"Typically, Defendants learned about PIPE transactions from placement agents who offered issuer securities to Defendants and other hedge funds in private offerings. In connection with Defendants' purchase of securities f?om the issuer in the unregistered PIPE transactions, Defendants sold short the issuer's stock. As a condition of the PIPE transactions, the issuer promised to file with the Commission a resale registration statement that, once effective, would permit Defendants to sell the issuer securities that they had acquired through a PIPE transaction. Later, once the Commission declared the resale registration statement effective, Defendants used the PIPE shares to cover the short positions -a practice prohibited by the registration provisions of the federal securities laws. To avoid detection and regulatory scrutiny, Defendants employed a variety of deceptive trading techniques, including wash sales, matched orders, and pre-arranged trades, to make it appear that they were covering their short sales with open market shares, when, in fact, Defendants were on both sides of the transactions and were covering with their PIPE shares."
SEC v 10 defendants in unlawful trading scheme.
www.sec.gov/litigation/complaints/2007/comp20278.pdf
"Typically, Defendants learned about PIPE transactions from placement agents who offered issuer securities to Defendants and other hedge funds in private offerings. In connection with Defendants' purchase of securities f?om the issuer in the unregistered PIPE transactions, Defendants sold short the issuer's stock. As a condition of the PIPE transactions, the issuer promised to file with the Commission a resale registration statement that, once effective, would permit Defendants to sell the issuer securities that they had acquired through a PIPE transaction. Later, once the Commission declared the resale registration statement effective, Defendants used the PIPE shares to cover the short positions -a practice prohibited by the registration provisions of the federal securities laws. To avoid detection and regulatory scrutiny, Defendants employed a variety of deceptive trading techniques, including wash sales, matched orders, and pre-arranged trades, to make it appear that they were covering their short sales with open market shares, when, in fact, Defendants were on both sides of the transactions and were covering with their PIPE shares."