This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,908.82 +104.02 0.58%
S&P 500 2,070.90 +0.25 0.01%
NASDAQ 4,770.5190 +5.1390 0.11%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs