This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Gryphon Hedge Fund Nears PIPEs Resolution

Gryphon Partners, a Dallas hedge fund, is weighing a settlement with securities regulators over allegations the $265 million money manager engaged in manipulative trading in shares of small-cap companies doing private placements of stock.

Within the past month, Gryphon sent a letter to investors in its flagship Gryphon Master Fund informing them the fund's managers are considering negotiating a settlement with the Securities and Exchange Commission to put the allegations behind them, according to people familiar with the letter.

The allegations of manipulative trading against Gryphon stem from an ongoing SEC inquiry into improper short-selling by hedge funds that invest in so-called PIPEs, or private investments in public equity. The allegations facing Gryphon were first reported by last November.

The investigation into the $20 billion-a-year PIPEs market has focused on allegations of improper short-selling by hedge funds trying to profit from the usual decline in a company's stock after a PIPE deal is completed. Shares of companies doing PIPEs typically decline in anticipation of a flood of discounted stock coming into the market.

To some degree, every PIPE deal is a bit of a Faustian bargain for a cash-strapped company. In selling discounted stock, or a bond that converts into discounted shares, a small-cap company is often betting that a near-term hit to its stock price is justified by the cash it raises.

In the letter, Gryphon insists it has done nothing wrong and is prepared to fight the SEC if it can't come to an agreement, sources say. But the hedge fund, led by Edwin "Bucky" Lyon III, believes it's in the best of interest of investors to resolve the matter.

Investors in the Gryphon Master Fund also may be asked to approve the use of the fund's assets in an eventual settlement. Investors in Gryphon's Special Situations Fund would not contribute to any settlement regulators. There are no allegations of wrongdoing involving the Special Situations Fund.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FBR $8.54 -1.90%
PEIX $4.28 -5.40%
AAPL $95.18 1.64%
FB $117.44 -0.95%
GOOG $692.33 -0.84%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs