Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, December 11, 2012

SEC Charges Fund Manager with Illegal Trading to Benefit Fund

The SEC charged Steven B. Hart, a New York-based fund manager, with conducting a pair of illegal trading schemes to financially benefit his investment fund Octagon Capital Partners LP.  The SEC alleges that Hart made $831,071 during a four-year period through illicit trading while he also worked as a portfolio manager and employee at a New Jersey-based firm that served as an adviser for several affiliated investment funds.  In one scheme, Hart illegally matched 31 pre-market trades to benefit his own fund at the expense of one of his employer’s funds.  In the other scheme, Hart conducted insider trading in the securities of 19 issuers based on nonpublic information he learned in advance of their offering announcements. Furthermore, Hart signed two securities purchase agreements in which he falsely represented that he had not traded the issuer's securities prior to the public announcement of the offerings in which he had been confidentially solicited to invest.

Hart agreed to pay more than $1.3 million to settle the SEC’s charges.

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