- Thomson Reuters
Hedge fund legend Leon Cooperman said in a short phone call with investors on Wednesday that he intended to fight charges of insider trading against him.
Cooperman, a hedge fund industry legend, was charged earlier Wednesday along with his hedge fund firm, the $5.5 billion Omega Advisors. The charges surround a position the New York hedge fund took in Atlas Pipeline in 2010.
Cooperman, 73, said the feds offered him a settlement on the insider-trading charges but he refused it so he could protect his name and that of his hedge fund. He didn’t say how much the settlement would cost except that it was less than what he donated to charity each year.
“It took me 50 years of hard work and playing by the rules to get where I got,” Cooperman said with a tone of defiance, adding that he wouldn’t let the feds ruin his legacy. Cooperman is known for his rags-to-riches story, growing up in the South Bronx as the son of a plumber to become one of the industry’s most successful players. He is worth $3.1 billion, according to Forbes.
The insider-trading charges surround a position Omega took in Atlas Pipeline in 2010 that the Securities and Exchange Commission says was based on inside information about the sale of one of Atlas’ holdings, Elk City, that benefited Cooperman and Omega.
Cooperman said the Atlas Pipeline holding had actually generated big losses for the firm. “I’m embarrassed to say the losses were gigantic,” he said.
“We are being sued … even though we made no money from an increase from the stock price after the announcement,” Cooperman said during the call.
Earlier Wednesday, Cooperman sent a five-page letter to investors in which he defended himself and the trades. In the letter, Cooperman said Omega was not long, or bullish on an increase in Atlas’ stock price, before the announcement. To be “long” means to be betting that the value of a security will go up.
The SEC says Cooperman tried to cover up that he had spoken with an executive at Atlas Pipeline about the impending sale of Elk City before he traded on it. On the call, Cooperman said that accusation was false.
Cooperman also restated an earlier promise that he would voluntarily return money to his investors if the SEC case became too big of a distraction.
Cooperman declined to take questions, on advice of his counsel, though he said he wished he could.
“I apologize for not being able to take questions,” he said toward the end of the call, “but we’re paying the lawyers a lot of money, and we’re going to listen to the lawyers.”
As of Tuesday, Omega had posted positive returns for the year, he added. The Omega credit fund was up 13%, the Omega equity fund was up 5%, and the firm’s main fund was up 3%.