U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19942 / December 12, 2006
SEC v. Edwin Buchanan Lyon, IV, Gryphon Master Fund, L.P., Gryphon Partners, L.P., Gryphon Partners (QP), L.P., Gryphon Offshore Fund, Ltd., Gryphon Management Partners, L.P., Gryphon Management Partners III, L.P., and Gryphon Advisors, L.L.C, Civil Action No. 06 CV 14338
SEC Files Fraud Charges Against Hedge Fund Manager Edwin "Bucky" Lyon, IV and the Gryphon Hedge Funds for Engaging in Illegal "Pipe" Trading Scheme
The Securities and Exchange Commission filed securities fraud and related charges today against Edwin "Bucky" Lyon, IV, Gryphon Master Fund, L.P., Gryphon Partners, L.P., Gryphon Partners (QP), L.P., Gryphon Offshore Fund, Ltd., Gryphon Management Partners, L.P., Gryphon Management Partners III, L.P., and Gryphon Advisors, L.L.C. (collectively, "Gryphon Partners") in the U.S. District Court for the Southern District of New York. The Commission's complaint alleges that the defendants collectively perpetrated an illegal trading scheme to evade the registration requirements of the federal securities laws in connection with at least thirty-five unregistered securities offerings, which are commonly referred to as "PIPEs" (Private Investments in Public Equities), made materially false representations to the PIPE issuers, and engaged in illegal insider trading.
The Commission's complaint alleges that, during the period 2001 through 2004, Lyon implemented an unlawful trading scheme that enabled Gryphon Partners to improperly realize more than $6.5 million in ill-gotten gains by investing in PIPE offerings without incurring market risk. Specifically, the complaint alleges:
By engaging in the foregoing conduct, the complaint alleges that defendants violated the registration provisions of the Securities Act (Sections 5(a), 5(b), and 5(c)) and the antifraud provisions of both the Securities Act (Section 17(a)) and the Securities Exchange Act of 1934 (Section 10(b) and Rule 10b-5, thereunder). The Commission's complaint seeks to permanently enjoin defendants from future violations of the applicable provisions of the federal securities laws, disgorgement of ill-gotten gains (with prejudgment interest thereon) and civil penalties.
The Commission acknowledges the assistance of the Investment Dealers Association of Canada. The Commission's investigation is continuing.