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Leon Cooperman: SEC insider trading case was 'extraordinarily abusive'

  • Fresh off a settlement with regulators regarding insider trading charges, Leon Cooperman said he would have won the case but chose to settle instead.
  • "My lawyers told me that the probability of my winning would be overwhelmingly high, that if I didn't win it had nothing to do with the merits of the case," Cooperman said.
  • As part of the settlement, Omega Advisors admitted to no wrongdoing.

Fresh off a settlement with government regulators regarding insider trading charges, hedge fund titan Leon Cooperman said he would have won the case but chose to settle instead.

Cooperman's firm agreed earlier this month to a $4.9 million settlement with the Securities and Exchange Commission after allegations of insider trading. As part of the settlement, Omega Advisors admitted to no wrongdoing.

In a live interview Tuesday with CNBC, Cooperman said his lawyers assured him his case was solid, but that proceeding with a trial would have been difficult.

"My lawyers told me that the probability of my winning would be overwhelmingly high, that if I didn't win it had nothing to do with the merits of the case," he said. "It would have to do with the fact that I'm a former Goldman partner, I'm a hedge fund manager, I'm wealthy. Those are enough factoids that impress juries."

His lawyers also told him that the cost of a trial could hit $20 million due to appeals the government likely would have filed if it had lost.

Cooperman said the SEC initially had offered a settlement of $9 million and a five-year ban from the industry, which he rejected. The ban in particular essentially would have taken the 74-year-old Cooperman out of business for life.

Leon Cooperman, CEO of Omega Advisors.
Adam Jeffery | CNBC
Leon Cooperman, CEO of Omega Advisors.

"I didn't want to tilt at windmills," he added. "I didn't want to go on for another two or three years, because I promised my investors from day one that this would not cost them anything — between the insurance and my own money I would take care of everything and that basically it would not distract me from doing the job."

SEC officials declined comment to CNBC on Cooperman's statements.

Cooperman said he's received high levels of support from clients and colleagues during his ordeal. Billionaire businessman Mark Cuban chimed in on Twitter during Cooperman's interview:

In statements before the settlement, Cooperman repeatedly denied the firm did anything wrong. Cooperman did not receive any suspension from the securities industry, perhaps the most significant part of the settlement.

The commission had alleged that Cooperman used his standing as a major shareholder in Atlas Pipeline Partners to get confidential information that he ultimately used to trade and gain $4 million in profits.

Along with the cash settlement, Omega is required to keep an outside consultant on hand to monitor trading for the next five years.

Cooperman said the cost to his firm has been major and "way out of proportion to what was reasonable." In all, Omega has lost about $4 billion in client asset withdrawal, taking the total under management to $3.6 billion.

"The process in my opinion was totally abusive. It's a problem that the government should address," he said.