2014-09-16 SEC Press pdf 94 KB 10,105 chars

In re TROUBH PARTNERS LP

Exhibit of SEC Sanctions 19 Firms and Individual Trader for Short Selling Violations in Advance of Stock Offerings

summary

Troubh Partners LP, a New York investment firm, illegally short‑sold and then bought shares in four follow‑on offerings (MGM Resorts, JPMorgan Chase, Citigroup, Hartford Financial) violating Rule 105, and was ordered to cease‑and‑desist and pay $408,710.28 in disgorgement, interest and civil penalties.

paragraph

Troubh Partners LP violated Rule 105 of Regulation M by short‑selling and subsequently purchasing shares in four follow‑on offerings—MGM Resorts International, JPMorgan Chase, Citigroup, and Hartford Financial Services—between May 2009 and March 2010. The prohibited transactions generated $262,744 in illicit profits for the firm. Under the SEC settlement, Troubh consented to a cease‑and‑desist order, disgorgement of $262,744, $39,315.13 in prejudgment interest, and a $106,651.15 civil penalty, totaling $408,710.28 payable within 14 days.

narrative

Troubh Partners LP, a limited partnership based in New York with about $23 million in assets under management, engaged in four Rule 105 violations by short‑selling shares of MGM Resorts, JPMorgan Chase, Citigroup and Hartford Financial during the restricted periods preceding their follow‑on public offerings, then buying the offered shares to capture profits. The short sales occurred from May 2009 through March 2010, and the combined profit from these transactions was $262,744. The SEC found the conduct unlawful because Rule 105 prohibits purchasing securities in an offering after short‑selling the same security during the restricted window. Troubh consented to the cease‑and‑desist order without admitting or denying the findings. The settlement requires disgorgement of the $262,744 profit, payment of $39,315.13 in prejudgment interest, and a civil penalty of $106,651.15, for a total civil penalty of $408,710.28. Payment must be made within 14 days via electronic transfer, Pay.gov, or certified payment methods, with interest accruing on any late payment. The order also mandates future compliance with Rule 105 and prohibits similar manipulative short‑sale practices.

Enriched metadata

Scheme: market-manipulation (100%)
Outcome: settled
Disgorgement: $262,744
Civil penalty: $408,710
Victim loss: $23,000,000

Classified market-manipulation(confidence 100%). EDGAR detection: forms SC 13D/G/13F· recall 53% / precision 9%. detection rule →

Extracted insights

Dollar amounts 12

$23.00M $23 million $10M–$100M
$1.00M $1,000,000 $1M–$10M
$409K $408,710 $100K–$1M
$263K $262,744 $100K–$1M
$211K $211,146 $100K–$1M
$186K $185,592 $100K–$1M
$107K $106,651 $100K–$1M
$39K $39,315 $10K–$100K
$31K $31,069 $10K–$100K
$26K $25,553 $10K–$100K
$20K $19,540 $10K–$100K
$989 $989 <$10K

Entities 2

agency Securities and Exchange Commission
person troubh partners lp

Triples 10

Troubh Partners LP violated Rule 105 of Regulation M of the Securities Exchange Act of 1934
Troubh Partners LP sold short equity securities during Rule 105 restricted period
Troubh Partners LP purchased offering shares from underwriter or broker-dealer
Troubh Partners LP generated $262,744 in profits from violations
Troubh Partners LP committed violations on four occasions from May 2009 through March 2010
Troubh Partners LP is based in New York, New York
Troubh Partners LP has been in existence since 1997
Troubh Partners LP manages approximately $23 million in assets
SEC instituted cease-and-desist proceedings against Troubh Partners LP
SEC issued Release No. 73111 on September 16, 2014

PDF

In re TROUBH PARTNERS LP · Source

Text layers

Extracted body text (10,105c)

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 73111 / September 16, 2014

ADMINISTRATIVE PROCEEDING
File No. 3-16115

In the Matter of

TROUBH PARTNERS LP

Respondent.

ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER AND CIVIL
PENALTY

The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities
Exchange Act of 1934 (“Exchange Act”), against Troubh Partners LP (“Troubh” or
“Respondent”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the
purpose of these proceedings and any other proceedings brought by or on behalf of the
Commission, or to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over it and the subject matter of these
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making
Findings, and Imposing a Cease-and-Desist Order and Civil Penalty (“Order”), as set forth below.

2
III.

On the basis of this Order and Respondent’s Offer, the Commission finds
1
that:

Summary

1. These proceedings arise out of violations of Rule 105 of Regulation M of the
Exchange Act by Troubh, a New York-based investment firm. Rule 105 prohibits selling short an
equity security that is the subject of certain public offerings and purchasing the offered security
from an underwriter or broker or dealer participating in the offering, if such short sale was effected
during the restricted period as defined therein.

2. On four occasions, from May 2009 through March 2010, Troubh bought offering
shares from an underwriter or broker or dealer participating in a follow-on public offering after
having sold short the same security during the Rule 105 restricted period. These violations
collectively resulted in profits of $262,744.

Respondent

3. Troubh Partners LP is a limited partnership with its principal place of business in
New York, New York and is not registered with the SEC. Troubh Partners LP has been in
existence since 1997 and has approximately $23 million in assets under management.

Legal Framework

4. Rule 105 makes it unlawful for a person to purchase equity securities in certain
public offerings from an underwriter, broker, or dealer participating in the offering if that person
sold short the security that is the subject of the offering during the restricted period defined in the
rule, absent an exception. 17 C.F.R. § 242.105; see Short Selling in Connection with a Public
Offering, Rel. No. 34-56206, 72 Fed. Reg. 45094 (Aug. 10, 2007) (effective Oct. 9, 2007). The
Rule 105 restricted period is the shorter of the period: (1) beginning five business days before the
pricing of the offered securities and ending with such pricing; or (2) beginning with the initial
filing of a registration statement or notification on Form 1-A or Form 1-E and ending with the
pricing. 17 C.F.R. § 242.105(a)(1) and (a)(2).

5. The Commission adopted Rule 105 “to foster secondary and follow-on offering
prices that are determined by independent market dynamics and not by potentially manipulative
activity.” 72 Fed. Reg. 45094. Rule 105 is prophylactic and prohibits the conduct irrespective of
the short seller’s intent in effecting the short sale. Id.

1
The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other person
or entity in this or any other proceeding.

3
Troubh’s Violations of Rule 105 of Regulation M

6. On May 12, 2009, Troubh sold short 25,000 shares of MGM Resorts International
(“MGM”) during the restricted period at a price of $13.2138 per share. On May 13, 2009, MGM
announced the pricing of a follow-on offering of its common stock at $7.00 per share. Troubh
received an allocation of 5,000 shares in that offering. The difference between Troubh’s proceeds
from the restricted period short sales of MGM shares and the price paid for the 5,000 shares
received in the offering was $31,069. Thus, Troubh’s participation in the MGM offering resulted
in total profits of $31,069.

7. On June 1, 2009, Troubh sold short 60,000 shares of JP Morgan Chase & Co.
(“JPM”) during the restricted period at a price of $37.2040 per share. On June 2, 2009, JPM
announced the pricing of a follow-on offering of its common stock at $35.25 per share. Troubh
received an allocation of 10,000 shares in that offering. The difference between Troubh’s proceeds
from the restricted period short sales of JPM shares and the price paid for the 10,000 shares
received in the offering was $19,540. Thus, Troubh’s participation in the JPM offering resulted in
total profits of $19,540.

8. From December 10, 2009 through December 14, 2009, Troubh sold short 267,800
shares of Citigroup Inc. (“C”) during the restricted period at an average price of $3.8509 per share.
On December 16, 2009, C priced a follow-on offering of its common stock at $3.15 per share.
Troubh received an allocation of 1,000,000 shares in that offering. The difference between
Troubh’s proceeds received from the restricted period short sales of C shares and the price paid for
the 267,800 shares received in the offering was $185,592.26. Respondent also improperly
obtained a benefit of $25,553.78 by purchasing the remaining 732,200 shares at a discount from
C’s market price. Thus, Troubh’s participation in the C offering resulted in total profits of
$211,146.

9. On March 17, 2010, Troubh sold short 10,000 shares of the Hartford Financial
Services Group, Inc. (“HIG”) during the restricted period at a price of $28.7392 per share. On
March 17, 2010, HIG priced a follow-on offering of its common stock at $27.75 per share. Troubh
received an allocation of 1,000 shares in that offering. The difference between Troubh’s proceeds
received from the restricted period short sales of HIG shares and the price paid for the 1,000 shares
received in the offering was $989. Thus, Troubh’s participation in the HIG offering resulted in
total profits of $989.

10. In total, Troubh’s violations of Rule 105 resulted in profits of $262,744.

Violations

11. As a result of the conduct described above, Troubh violated Rule 105 of Regulation
M under the Exchange Act.

4
Troubh’s Remedial Efforts & Cooperation
12. In determining to accept the Offer, the Commission considered remedial
acts promptly undertaken by Respondent and cooperation afforded to Commission staff.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent Troubh’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, Respondent Troubh cease and desist
from committing or causing any violations and any future violations of Rule 105 of Regulation M of
the Exchange Act;

B. Troubh shall within fourteen (14) days of the entry of this Order, pay disgorgement
of $262,744, prejudgment interest of $39,315.13, and a civil money penalty in the amount of
$106,651.15 (for a total of $408,710.28) to the United States Treasury. If timely payment is not
made on the disgorgement amount, additional interest shall accrue pursuant to SEC Rule of
Practice 600. If timely payment is not made on the civil money penalty, additional interest shall
accrue pursuant to 31 U.S.C. 3717. Payments must be made in one of the following ways:

(1) Respondent may transmit payment electronically to the Commission, which will
provide detailed ACH transfer/Fedwire instructions upon request;
2

(2) Respondent may make direct payment from a bank account via Pay.gov through the
SEC website at http://www.sec.gov/about/offices/ofm.htm; or
(3) Respondent may pay by certified check, bank cashier’s check, or United States postal
money order, made payable to the Securities and Exchange Commission and hand-
delivered or mailed to:

Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying
Troubh as a Respondent in these proceedings, and the file number of these proceedings; a copy of

2
The minimum threshold for transmission of payment electronically is $1,000,000. For amounts below the
threshold, respondents must make payments pursuant to options (2) or (3) above.

5
the cover letter and check or money order must be sent to Gerald W. Hodgkins, Associate Director,
Division of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington,
DC 20549.

By the Commission.

Jill M. Peterson
Assistant Secretary

OCR text (9,492c · tika · 95% conf)

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 73111 / September 16, 2014

ADMINISTRATIVE PROCEEDING
File No. 3-16115

In the Matter of

TROUBH PARTNERS LP

Respondent.

ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER AND CIVIL
PENALTY

II.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds1 that:

Summary

1. These proceedings arise out of violations of Rule 105 of Regulation M of the

Exchange Act by Troubh, a New York-based investment firm. Rule 105 prohibits selling short an
equity security that is the subject of certain public offerings and purchasing the offered security
from an underwriter or broker or dealer participating in the offering, if such short sale was effected
during the restricted period as defined therein.

Respondent

Legal Framework

5. The Commission adopted Rule 105 “to foster secondary and follow-on offering

prices that are determined by independent market dynamics and not by potentially manipulative
activity.” 72 Fed. Reg. 45094. Rule 105 is prophylactic and prohibits the conduct irrespective of
the short seller’s intent in effecting the short sale. Id.

1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other person
or entity in this or any other proceeding.

Troubh’s Violations of Rule 105 of Regulation M

10. In total, Troubh’s violations of Rule 105 resulted in profits of $262,744.

Violations

11. As a result of the conduct described above, Troubh violated Rule 105 of Regulation
M under the Exchange Act.

Troubh’s Remedial Efforts & Cooperation

12. In determining to accept the Offer, the Commission considered remedial
acts promptly undertaken by Respondent and cooperation afforded to Commission staff.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent Troubh’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, Respondent Troubh cease and desist
from committing or causing any violations and any future violations of Rule 105 of Regulation M of
the Exchange Act;

(1) Respondent may transmit payment electronically to the Commission, which will
provide detailed ACH transfer/Fedwire instructions upon request;2

(2) Respondent may make direct payment from a bank account via Pay.gov through the
SEC website at http://www.sec.gov/about/offices/ofm.htm; or

(3) Respondent may pay by certified check, bank cashier’s check, or United States postal
money order, made payable to the Securities and Exchange Commission and hand-
delivered or mailed to:

Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying
Troubh as a Respondent in these proceedings, and the file number of these proceedings; a copy of

2 The minimum threshold for transmission of payment electronically is $1,000,000. For amounts below the
threshold, respondents must make payments pursuant to options (2) or (3) above.

the cover letter and check or money order must be sent to Gerald W. Hodgkins, Associate Director,
Division of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington,
DC 20549.

By the Commission.

Jill M. Peterson
Assistant Secretary