SEC Charges Trader

A year ago, Mangan paid a $125,000 fine to the NASD to settle similar allegations arising from the Compudyne PIPE deal. But now Managan has decided to fight the latest attempt by regulators to question his actions.

"By taking this case to court, I will finally have the opportunity to get the facts of my case out of the SEC's bureaucracy and into a court of law,'' says Mangan. "I never engaged in insider trading.

In his statement, Mangan says the SEC allegations center around a single trade and was under the impression that what he was doing was proper. He says the trade was made in "complete good faith and without any intent to benefit from undisclosed information.''

Meanwhile, federal prosecutors also are investigating the Compudyne deal. In November, a federal grand jury indicted Hilary Shane, another hedge fund manager, who also reached an earlier regulatory settlement with the SEC and the NASD in the Compudyne investigation. The indictment charges Shane with insider trading, claiming she profited from a series of improper short trades in shares of Compudyne.