U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20356 / November 5, 2007
SEC v. TCMP3 Partners, L.P., TCMP3 Capital, LLC, Titan Capital Management, LLC, Walter M. Schenker, and Steven E. Slawson, Civil Action No. 1:07CV01990 (JDB) (D.D.C.)
SEC Files Settled Enforcement Action Against Hedge Fund TCMP3 Partners, L.P. for Engaging in Unlawful "PIPE" Trading
The Securities and Exchange Commission filed a settled action today against New Jersey-based hedge fund TCMP3 Partners, L.P., its general partner TCMP3 Capital, LLC, its investment manager Titan Capital Management, LLC, and portfolio managers Walter M. Schenker and Steven E. Slawson in the U.S. District Court for the District of Columbia. The defendants agreed to settle the Commission's charge that they violated of Section 5 of the Securities Act of 1933 ("Securities Act") in connection with 26 unregistered securities offerings, which are commonly referred to as "PIPEs" (Private Investment in Public Equity). The Commission alleges in its complaint that the defendants typically, after agreeing to invest in a PIPE offering, sold short the issuer's stock. The Commission's complaint further alleges that, once the Commission declared the resale registration statement for a PIPE effective, defendants used some or all of the PIPE shares to close out pre-effective date short positions by journaling PIPE shares to their short account.
To settle the Commission's charges, and without admitting or denying the allegations in the complaint, the defendants consented to the entry of a final judgment permanently enjoining them from future violations of Section 5 of the Securities Act and ordering them to pay a total of $1,195,060 in disgorgement, prejudgment interest, and civil penalties. Specifically, the final judgment orders TCMP3 Partners, L.P. to pay $888,624 in disgorgement and prejudgment interest, TCMP3 Capital, LLC to pay $149,130 in disgorgement and prejudgment interest, and Titan Capital Management, LLC to pay $7,306 in disgorgement and prejudgment interest, and further orders Schenker and Slawson each to pay a $75,000 civil penalty.
The Commission's investigation is continuing.