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Several other funds have been under the lens this year.
Stephen Taub, CFO.com | US
October 25, 2005
Alexandra Investment Management LLC, a hedge fund with $1.4 billion under management, announced that it is being investigated by the Securities and Exchange Commission as part of a wider probe into private investments in public equities (PIPEs).
The company, which stated that it has been providing information on its PIPEs business to federal regulators since 2004, disclosed in a filing that "neither the U.S. attorney's office nor the SEC has advised the investment adviser about the particular scope of the investigation or identified particular investment transactions that are under investigation,'' according to Bloomberg.
The wire service pointed out that in April 2004, the U.S. Attorney for the Eastern District of New York indicted Alexandra Investment employee Slava Volman for alleged securities violations between 1999 and 2002. During that time, Volman worked for broker-dealer Donald & Co. Securities Inc.; he joined Alexandra in November 2003 and reportedly directed private-placement investments until he was indicted.
Bloomberg stressed that Alexandra's filing didn't specify whether the PIPE probe is connected with last year's indictment, and that Volman's attorney declined to comment.
More than a year ago, TheStreet.com reported that the SEC issued subpoenas and requests for documents to about 20 brokerages and 10 hedge funds in connection with PIPE transactions.
In April, Friedman Billings Ramsey offered to pay $7.5 million to the SEC and the National Association of Securities Dealers to settle charges related to trading in a company account and the October 2001 offering of a PIPE on behalf of CompuDyne Inc. Also this spring, Emanuel Friedman retired as co-chairman and co-chief executive officer of the firm.
That same month, the SEC charged Guillaume Pollet, a former managing director of SG Cowen & Co., with insider trading and fraud. The commission alleged that during 2001, Pollet traded in the shares of 10 public companies that either engaged in, or were contemplating engaging in, PIPE financings after receiving confidential non-public information about the upcoming transactions.
In June, Deephaven Capital Management — the asset-management subsidiary of Knight Capital Group Inc. — and a former Deephaven employee received Wells notices from the SEC's Division of Enforcement stemming from alleged fraudulent trading of PIPEs from June 1, 1999, through March 2004.