When securities regulators sued the hedge fund manager Leon G. Cooperman last year, accusing him of violating insider trading laws, he vowed to fight to the bitter end. His decades-long reputation on Wall Street was on the line, he said at the time.
Now, nearly eight months later, he and his firm, Omega Advisors, have agreed to settle, paying just under $5 million in civil penalties and forfeited profits.
But unlike other hedge fund managers who have reached settlements with the Securities and Exchange Commission in insider trading cases, Mr. Cooperman is not admitting any wrongdoing. Significantly, he will not be barred from the securities industry.
The terms of the settlement were filed in Federal District Court in Philadelphia on Thursday and must still be approved by a federal judge.
Mr. Cooperman, 74, declined to comment on the settlement — a bit unusual for man known for not mincing words. In September, when the Securities and Exchange Commission filed its lawsuit, Mr. Cooperman told his investors, “I’m not going to let these people destroy my legacy.”
But it may well be that he is holding his tongue until the settlement is formally approved.
Mr. Cooperman’s lawyers, Daniel Kramer and Theodore Wells at Paul Weiss, said in a statement, “We and our clients are very pleased with this outcome, which speaks for itself.”
In the lawsuit, regulators contended that Mr. Cooperman had misused his position as one of the biggest shareholders in Atlas Pipeline Partners to gain confidential information from an unidentified executive at the company about the sale of one of its gas-processing facilities to another energy company in July 2010. The Securities and Exchange Commission said Mr. Cooperman and his firm had reaped about $4 million in profits.
Stephanie Avakian, acting enforcement director at the agency, said on Thursday that the “settlement protects against future violations while requiring Cooperman and Omega Advisors to pay significant fines for their misconduct.”
She noted that the settlement requires Omega to retain an outside consultant to monitor trading activity until 2022.
Still, in some ways, Mr. Cooperman can be seen as the victor in this tussle with regulators.
The $4.9 million in fines and forfeiture is a relatively paltry sum for a man who made $225 million last year, according to Institutional Investor’s Alpha magazine. And the settlement allows him to keep running his hedge fund.
Securities regulators, before the settlement, were seeking to bar Mr. Cooperman from working in the industry for some period.
But the battle with the regulators has taken its toll in terms of redemptions to his fund. In September, his Omega hedge fund managed about $5.4 billion. Since then, investors have pulled money from the firm, even though some of his portfolios reported strong returns.
A month after the S.E.C. lawsuit was filed, Goldman Sachs decided to stop having him manage about $300 million for its employee retirement fund. The decision by Goldman was a personal blow to Mr. Cooperman, who is a Goldman alumnus.
If the case had not been settled, Mr. Cooperman’s case was expected to go trial later this year.
The settlement, if approved by the judge, would allow Mr. Cooperman to go back to focusing on managing money and repairing the damage to his legacy.
Source: NY Times