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Hedge Fund Short Sales

New York, NY: (Oct-10-07) The US Securities and Exchange Commission (SEC) brought charges against Sandell Asset Management, alleging that the firm improperly made short sales that were designed to benefit from the turmoil following Hurricane Katrina. The suit was filed following an SEC investigation that revealed that the New York hedge fund group; Thomas Sandell, its chief executive officer; and two other employees engaged in the unethical practice. The short sales were in connection with trading in the securities of Hibernia Corporation in the aftermath of Katrina. Hibernia, a New Orleans-based bank holding company, which was the subject of an acquisition agreement with Capital One Financial Corporation at the time of Katrina.

As part of a settlement reached, Sandell Asset Management agreed to pay the SEC $8 million to resolve allegations. Neither the firm nor the executives admitted to any liability or wrongdoing in agreeing to the settlement. Sources stated that the settlement included a civil fine of $650,000 for the firm, and a penalty of $190,000 for top executives, including Sandell, a former Bear Stearns risk arbitrage specialist. [MSNBC: HEDGE FUND SHORT SALES]

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Published on Oct-11-07


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