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

SEC Sues Gryphon

Up until the past few months, Gryphon had been one of the more active investors in the PIPEs market. Since 1999, the first year Gryphon began investing in PIPEs, it has sunk a total of $190 million into these private stock deals, according to PlacementTracker, a research firm.

Some of the companies doing PIPE deals that Gryphon improperly shorted from 2001 to 2004, according to regulators, include HealthExtras (HLEX), MGI Pharma (MOGN), AuthentiDate (ADAT) and Generex Biotech (GNBT).

In the complaint, the SEC alleges Gryphon inappropriately began shorting shares of companies before a PIPE was announced. The hedge fund did this even though it was warned by a lawyer that doing so could be improper, regulators say.

Regulators say Gryphon also engaged in improper short-selling by using an unnamed Canadian broker to engage in an illegal trading practice called naked shorting.

Naked shorting is an improper trading strategy in which a hedge fund shorts a stock without first borrowing shares from a broker, as is required under federal securities laws.

In a traditional short sale, a bearish trader must first borrow shares from a broker and then sell them. The trader then hopes to pay off the loan at a later date with stock purchased at a lower price, pocketing the difference as profit.

The SEC, NASD and federal prosecutors are continuing to investigate other hedge funds and brokers for manipulative trading in the PIPEs market. previously has reported that hedge fund giant HBK Investments, also based in Dallas, is being investigated over allegations of wrongful trading. Sources say Friedman Billings Ramsey (FBR - Get Report) is close to settling with regulators over allegations its proprietary hedge funds illegally shorted shares of a company for which it managed a PIPE.

"Fraud and insider trading by hedge funds are a high priority" for the SEC, says Robert Kaplan, an assistant director.
3 of 3

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
ADAT $3.20 1.27%
GNBT $0.01 -5.08%
FBR $8.64 2.61%
AAPL $92.72 -0.56%
FB $119.49 1.43%


Chart of I:DJI
DOW 17,740.63 +79.92 0.45%
S&P 500 2,057.14 +6.51 0.32%
NASDAQ 4,736.1550 +19.0610 0.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs