Securities Law Prof Blog

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

Monday, October 20, 2008

SEC Settles Insider Trading Charges in Connection with PIPES offering with Hedge Fund Analyst

The SEC settled charges that Brian D. Ladin, a former analyst for Bonanza Master Fund Ltd. ("Bonanza"), a Dallas-based hedge fund, engaged in unlawful insider trading in connection with a 2004 "PIPE" (an acronym for private investment in public equity) offering conducted by Radyne Comstream Inc. Ladin agreed to entry of a final judgment imposing an injunction and ordering him to pay $330,427, consisting of $13,427 in disgorgement and prejudgment interest and a $317,000 civil penalty.

The Commission's complaint alleges, among other things, that Ladin accepted a duty to keep the offering information confidential. The Complaint further alleges that Ladin, on the basis of the material, non-public PIPE information, presented an investment in Radyne to Bonanza, resulting in Bonanza establishing a 100,000 share short position in Radyne stock. The Commission's complaint further alleges that Ladin, in signing the offering's stock purchase agreement on behalf of Bonanza, represented that Bonanza did not hold a short position in Radyne common stock when he knew, or was reckless or negligent in not knowing, that Bonanza held a short position in Radyne's common stock.

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