Hedge Funds

Leon Cooperman: SEC charges are without merit; we will vigorously defend ourselves

Cooperman: Charges are without merit

Billionaire hedge fund manager Leon Cooperman denied insider trading charges against him and his firm Wednesday, saying he would vigorously defend against the accusations.

"We have done nothing improper and categorically deny" the Securities and Exchange Commission charges, the Omega Advisors chairman and CEO told investors in a letter.

"Needless to say, we are highly disappointed with the Commission's decision to file charges, and we strongly disagree with the Commission that either the firm or I have engaged in any unlawful conduct," Cooperman wrote.

The SEC alleges that the 73-year-old Cooperman made illegal profits in 2010, trading in Atlas Pipeline stock using confidential information he obtained as a large shareholder. When Atlas struck a deal to sell its Elk City, Oklahoma, operating facilities, its shares' value increased by more than 30 percent.

Cooperman said Omega first invested in the company in 2007, three years before the trading period in question, buying about 1.9 million shares. He added that he had known the Cohen family, which controlled the company "for many years."

By 2010, Cooperman said, his firm had bought more than 4 million shares at various prices as the stock's value fluctuated. From July 13 to July 19, 2010, Omega bought 343,600 shares for two clients, Cooperman said. He contended that "Omega did not purchase Atlas Pipeline shares in July 2010 for any of the Omega funds in which I had my own capital invested."

Atlas Pipeline announced the Elk City deal on July 28, 2010, and its shares rose about 31 percent that day, according to the SEC complaint. The agency says "Cooperman and Omega illegally capitalized on inside information by purchasing APL securities in advance of the public disclosure."

But Cooperman said that "Omega sold no shares in the company" after the pipeline sale and did not unload any of its stake until a year after the announcement.

But the SEC says Cooperman may not have given the truth about those events. Its complaint says he tried to "fabricate a story" in case he was questioned about the trading after he received a subpoena about it.

The complaint says Cooperman knew about the sale ahead of its announcement, even asking an Atlas Pipeline executive about its progress.

CNBC's Jon Marino contributed to this report.