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(Adds details from decision, loss of assets under management, byline)
By Jonathan Stempel
March 20 (Reuters) - 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 processing unit.
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 companies.
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)