(Adds details from decision, loss of assets under management,
By Jonathan Stempel
March 20 A federal judge on Monday rejected
billionaire hedge fund manager Leon Cooperman's bid to dismiss
the U.S. Securities and Exchange Commission's insider trading
case against him and his firm Omega Advisors Inc.
Without ruling on the merits, U.S. District Judge Juan
Sanchez in Philadelphia said the SEC "pleaded a plausible claim"
that Cooperman and Omega reaped about $4.09 million of profit in
2010 by trading illegally in Atlas Pipeline Partners LP, based
on tips from an Atlas executive.
Monday's decision is a major defeat for Cooperman, 73, and
sets up a possible trial that could further tarnish his legacy.
The case has already hurt New York-based Omega, which has
seen assets under management tumble to $3.5 billion as of Jan.
31 from about $5.4 billion when the SEC sued last September, and
about $10.7 billion two years earlier.
Cooperman and Omega have denied wrongdoing. Neither they nor
their lawyers immediately responded to requests for comment.
SEC spokeswoman Judith Burns declined to comment.
The SEC said Cooperman used his position as one of Atlas'
largest shareholders to obtain nonpublic information from an
Atlas executive about the partnership's plan to sell a gas
According to the regulator, Cooperman broke a promise he
made to the executive not to trade on the information, and
profited on its stock, bonds and options when the announcement
of the sale caused Atlas' share price to rise 31 percent.
Cooperman said the case was fatally flawed because the SEC
did not say when his alleged agreement not to trade occurred, a
critical omission because it was only later that he could owe
the Atlas executive a duty not to misappropriate information.
But the judge said letting the SEC pursue its case "comports
with the congressional intent for securities laws to target
exactly the type of deception in which Cooperman engaged,
deception that is detrimental to the rightful owner of the
information, investors, and the public."
The allegations, Sanchez added, "sufficiently plead the
'who, what, when, where, and how' concerning defendants' insider
trading, giving rise to a plausible misappropriation claim."
Sanchez separately dismissed SEC claims that Cooperman
failed to file required reports about his stakes in eight public
The judge cited a lack of evidence that the defendants did
enough business in the area overseen by the Philadelphia court
to justify being sued there.
Along with Galleon Group founder Raj Rajaratnam and
billionaire Steven A. Cohen's SAC Capital Advisors LP, Cooperman
is one of the government's most prominent targets in insider
trading cases in recent years.
Cooperman has long been a prominent supporter of U.S.
stocks, appearing often on cable TV and at industry conferences
discussing his positions.
The son of a Bronx plumber, Cooperman is now worth $3
billion, according to Forbes magazine.
Atlas was bought by a unit of Targa Resources Corp
in February 2015.
The case is SEC v Cooperman et al, U.S. District Court,
Eastern District of Pennsylvania, No. 16-05043.
(Reporting by Jonathan Stempel, Suzanne Barlyn and Jennifer
Ablan in New York; Editing by Jonathan Oatis, Bernard Orr)