05 Apr
Appaloosa Management Under Probe for Shorting
Appaloosa Management is under SEC investigation for its shorting of the Wells Fargo stock prior to a secondary offering that it participated in. Appaloosa is a hedge fund run by David Tepper. The rule under investigation has to do with covering outstanding short positions with cheaper secondary offering shares. Palmyra Capital Advisors have already been fined $400,000 for a short-secondary cover scheme that they participated in. This rule is relatively new, with the SEC taking a closer look at such transactions beginning in 2007. The Wells Fargo stock secondary offering in question was significant because it was the offering that raised the money to complete the bank’s acquisition of Wachovia Corporation.