The SEC charged a hedge funder adviser, his investment advisory firm and a Delaware-based company in a scheme to manipulate a stock price.
According to the SEC Complaint filed in the U.S. District Court for the District of Massachusetts, the adviser obtained "short positions" in the stock of Ligand Pharmaceuticals, Inc. ("Ligand") and then subsequently sought to depress the stock price. The SEC alleged that the adviser and his firm mounted a public campaign against Ligand to convince the investing public that Ligand's stock was overvalued. The adviser authored multiple reports that the SEC claims contained misleading statements about Ligand and were intended to create a negative view of the company. The Complaint alleges that Ligand's stock dropped as a result of the false statements, and that the adviser and his firm made more than $1.3 million in ill-gotten gains.
The SEC charged the defendants with fraud. The SEC is seeking to have the adviser and his firm return all ill-gotten gains with prejudgment interest and pay monetary penalties. In addition, the SEC named a hedge fund set up by the adviser as a relief defendant and seeks to have it return the gains acquired as a result of the adviser's alleged misconduct.
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