U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21175 / August 12, 2009
Securities and Exchange Commission v. Edwin B. Lyon, IV, et al., 06 Civ. 14338 (SHS) (S.D.N.Y.)
Edwin B. Lyon, IV and the Affiliated Gryphon Funds Ordered to Pay $778,016 to Settle PIPE-Related Securities Fraud Charges
The Commission announced today that on August 7, 2009, the Honorable Sidney H. Stein, of the United States District Court for the Southern District of New York, entered a final judgment 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 SEC v. Edwin B. Lyon, IV, et al., 06 Civ. 14338 (S.D.N.Y.), an insider trading case the Commission filed on December 12, 2006. The Commission's complaint against Lyon and Gryphon Partners alleged that they violated the antifraud provisions of the federal securities laws in connection with four PIPE (an acronym for private investment in public equity) offerings.
Without admitting or denying the allegations in the complaint, Lyon and each Gryphon Partners entity consented to the entry of a final judgment permanently enjoining them from future violations of the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 (specifically, Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5). The final judgment also orders Lyon and Gryphon Advisors, L.L.C. to pay, jointly and severally, disgorgement of $66,712, plus prejudgment interest of $33,850, and a civil penalty of $310,288, and further orders Gryphon Master Fund, L.P., Gryphon Partners, L.P., Gryphon Partners (QP), L.P., Gryphon Offshore Fund, Ltd., Gryphon Management Partners, L.P., and Gryphon Management Partners III, L.P. to pay, jointly and severally, disgorgement in the amount of $243,576, plus prejudgment interest of $123,590.
The Commission's complaint alleged that, in connection with four separate PIPE offerings, Lyon and Gryphon Partners, after being solicited to invest, engaged in illegal insider trading by selling short the PIPE issuers' securities prior to the public announcement. Lyon and Gryphon Partners engaged in this conduct notwithstanding their agreement to keep information about the PIPE confidential.
The complaint also alleged that Lyon and Gryphon Partners engaged in conduct that violated Section 5 of the Securities Act. These claims were dismissed by the court on January 2, 2008.
See also Litigation Release No. 19942 (December 12, 2006).