Securities Law Prof Blog

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

Monday, February 23, 2009

Diamondback Capital Management Settles Reg M Charges

On February 20, the Commission settled administrative charges against Diamondback Capital Management, LLC. The Order finds that from August 2005 until October 2005, Diamondback willfully violated Rule 105 of Regulation M on four occasions. On each occasion, in connection with a follow-on offering, Diamondback sold securities short within five business days before the pricing of the offering, and covered the short sale, in whole or in part, with shares purchased in the offering. The violative trades generated profits of $94,014 for Diamondback's hedge-fund client.

The Commission's Order censures Diamondback and orders it to cease and desist from committing or causing any violations or any future violations of Rule 105 of Regulation M and to pay disgorgement of $94,014 and prejudgment interest of $21,154 and a civil penalty of $47,007. Diamondback consented to the issuance of the Order without admitting or denying the Commission's findings, except as to the Commission's jurisdiction over it and the subject matter of these proceedings. In The Matter of Diamondback Capital Management, LLC

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