SEC Sues Gryphon
Securities regulators are suing Gryphon Partners, accusing the $265 million Dallas hedge fund of engaging in an "illegal trading scheme" in conjunction with three dozen small-cap private stock placements.
The securities fraud charges against Gryphon, led by Edwin "Bucky" Lyon IV, arise from a more than two-year-old investigation into allegations of manipulative trading in the $22 billion-a-year market for PIPEs, or private investments in public equity.
The Securities and Exchange Commission, in a civil lawsuit filed Tuesday in New York federal court, allege Gryphon and Lyon "realized more than $6.5 million in ill-gotten gains" from 2001 through 2004.
Regulators allege Gryphon illegally shorted shares of at least 35 companies that sold discounted stock in PIPEs, a type of financing favored by small-cap companies in desperate need of cash. The SEC contends Gryphon "employed a variety of deceptive trading techniques" and misappropriated inside information to carry out its scheme.An attorney for Gryphon could not immediately be reached for comment. A short sale is a market bet that stock will decline in price. It's common for shares of a company doing a PIPE to decline after a deal is announced as investors adjust to a flood of discounted stock hitting the market. It's legal for investors in a PIPE deal to short a stock after the transaction is announced. But it's generally illegal to do so before the deal closes and is made public.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV