In re POLO CAPITAL

 
 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 70397 / September 16, 2013 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-15481 
 
 
In the Matter of 
 
POLO CAPITAL 
INTERNATIONAL 
            GESTAO DE 
            RECURSOS LTDA. 
 
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 
  
I. 
 
 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 Polo Capital International Gestão de Recursos 
Ltda. (“Polo Capital” 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 Polo Capital, a Brazilian-based investment adviser.  Rule 105 prohibits buying an 
equity security made available through a public offering, conducted on a firm commitment basis, 
from an underwriter or broker or dealer participating in the offering after having sold short the 
same security during the restricted period as defined therein. 
 
 2. In March 2011, Polo Capital bought offered shares from an underwriter or broker or 
dealer participating in a follow-on public offering after having sold short the same security during 
the restricted period.  This violation resulted in profits of $191,833.  
 
Respondent 
 
 3. Polo Capital International Gestão de Recursos Ltda. a/k/a Polo Capital 
Management is a Brazilian company organized under the laws of Brazil as a Brazilian Sociedade 
Limitada with its principal place of business in Rio de Janeiro, Brazil.  Since March 2012, Polo 
Capital has had exempt adviser reporting status with the Commission; it was not registered with 
the Commission at the time of the violations.  Polo Capital is the investment adviser to two 
offshore funds and has over $259 million in assets under management. 
 
Legal Framework 
 
4. Rule 105 makes it unlawful for a person to purchase equity securities from an 
underwriter, broker, or dealer participating in a public 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 Exchange Act Form 1-A or Form 1-E and ending with 
pricing.   
 
5. “The goal of Rule 105 is to promote offering prices that are based upon open 
market prices determined by supply and demand rather than artificial forces.”  Final Rule: Short 
Sales, Exchange Act Release No. 50103.  Rule 105 is prophylactic and prohibits the conduct 
irrespective of the short seller’s intent in effecting the short sale. 
 
                                                 
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 
 
Polo Capital’s Violations of Rule 105 of Regulation M 
 
 6. From March 21, 2011 through March 22, 2011, Polo Capital sold short 91,628 
shares of YPF S.A., Inc. (“YPF”) during the restricted period at an average price of $43.0241per 
share.  On March 23, 2011, YPF announced the pricing of a follow-on offering of its common 
stock at $41.00 per share.  Polo Capital received an allocation of 110,000 shares in that offering.  
The difference between Polo Capital’s proceeds from the restricted period short sales of YPF 
shares and the price paid for the 91,628 shares received in the offering was $185,463.90.  
Respondent also improperly obtained a benefit of $6,369.57 by purchasing the remaining 18,372 
shares at a discount from YPF’s market price.  Thus, Polo Capital’s participation in the YPF 
offering netted total profits of $191,833.47.  
 
  7. In total, Polo Capital’s violation of Rule 105 resulted in profits of $191,833.47. 
 
Violations 
 
 8. As a result of the conduct described above, Polo Capital violated Rule 105 of 
Regulation M under the Exchange Act.  
 
Polo Capital’s Remedial Efforts 
9. In determining to accept the Offer, the Commission considered remedial 
acts promptly undertaken by Respondent and cooperation afforded to the Commission 
staff. 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent Polo Capital’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 21C of the Exchange Act, Respondent Polo Capital cease and 
desist from committing or causing any violations and any future violations of Rule 105 of 
Regulation M of the Exchange Act;   
 
 B. Polo Capital shall within fourteen (14) days of the entry of this Order, cause to pay 
disgorgement of $191,833, prejudgment interest of $ 14,887.51, and a civil money penalty in the 
amount of $76,000 (for a total of $282,720.51) to the United States Treasury.  If timely payment is 
not made, additional interest shall accrue pursuant to SEC Rule of Practice 600.  Payments must be 
made in one of the following ways: 
 

 4 
(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 Polo 
Capital as a Respondent in these proceedings, and the file number of these proceedings; a copy of 
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. 
 
 
 
       Elizabeth M. Murphy 
       Secretary 
 
                                                 
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. 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 70397 / September 16, 2013 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-15481 

 

 

In the Matter of 

 

POLO CAPITAL 

INTERNATIONAL 

            GESTAO DE 

            RECURSOS LTDA. 

 

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 

  

I. 
 

 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 Polo Capital International Gestão de Recursos 

Ltda. (“Polo Capital” 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 finds1 that:  

 

Summary 

 

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

Exchange Act by Polo Capital, a Brazilian-based investment adviser.  Rule 105 prohibits buying an 

equity security made available through a public offering, conducted on a firm commitment basis, 

from an underwriter or broker or dealer participating in the offering after having sold short the 

same security during the restricted period as defined therein. 

 

 2. In March 2011, Polo Capital bought offered shares from an underwriter or broker or 

dealer participating in a follow-on public offering after having sold short the same security during 

the restricted period.  This violation resulted in profits of $191,833.  

 

Respondent 

 

 3. Polo Capital International Gestão de Recursos Ltda. a/k/a Polo Capital 

Management is a Brazilian company organized under the laws of Brazil as a Brazilian Sociedade 

Limitada with its principal place of business in Rio de Janeiro, Brazil.  Since March 2012, Polo 

Capital has had exempt adviser reporting status with the Commission; it was not registered with 

the Commission at the time of the violations.  Polo Capital is the investment adviser to two 

offshore funds and has over $259 million in assets under management. 

 

Legal Framework 

 

4. Rule 105 makes it unlawful for a person to purchase equity securities from an 

underwriter, broker, or dealer participating in a public 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 Exchange Act Form 1-A or Form 1-E and ending with 

pricing.   

 

5. “The goal of Rule 105 is to promote offering prices that are based upon open 

market prices determined by supply and demand rather than artificial forces.”  Final Rule: Short 

Sales, Exchange Act Release No. 50103.  Rule 105 is prophylactic and prohibits the conduct 

irrespective of the short seller’s intent in effecting the short sale. 

 

                                                 
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 

 

Polo Capital’s Violations of Rule 105 of Regulation M 

 

 6. From March 21, 2011 through March 22, 2011, Polo Capital sold short 91,628 

shares of YPF S.A., Inc. (“YPF”) during the restricted period at an average price of $43.0241per 

share.  On March 23, 2011, YPF announced the pricing of a follow-on offering of its common 

stock at $41.00 per share.  Polo Capital received an allocation of 110,000 shares in that offering.  

The difference between Polo Capital’s proceeds from the restricted period short sales of YPF 

shares and the price paid for the 91,628 shares received in the offering was $185,463.90.  

Respondent also improperly obtained a benefit of $6,369.57 by purchasing the remaining 18,372 

shares at a discount from YPF’s market price.  Thus, Polo Capital’s participation in the YPF 

offering netted total profits of $191,833.47.  

 

  7. In total, Polo Capital’s violation of Rule 105 resulted in profits of $191,833.47. 

 

Violations 

 

 8. As a result of the conduct described above, Polo Capital violated Rule 105 of 

Regulation M under the Exchange Act.  

 

Polo Capital’s Remedial Efforts 

9. In determining to accept the Offer, the Commission considered remedial 

acts promptly undertaken by Respondent and cooperation afforded to the Commission 

staff. 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent Polo Capital’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

 

 A. Pursuant to Section 21C of the Exchange Act, Respondent Polo Capital cease and 

desist from committing or causing any violations and any future violations of Rule 105 of 

Regulation M of the Exchange Act;   

 

 B. Polo Capital shall within fourteen (14) days of the entry of this Order, cause to pay 

disgorgement of $191,833, prejudgment interest of $ 14,887.51, and a civil money penalty in the 

amount of $76,000 (for a total of $282,720.51) to the United States Treasury.  If timely payment is 

not made, additional interest shall accrue pursuant to SEC Rule of Practice 600.  Payments must be 

made in one of the following ways: 

 



 4 

(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 Polo 

Capital as a Respondent in these proceedings, and the file number of these proceedings; a copy of 

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. 

 

 

 

       Elizabeth M. Murphy 

       Secretary 

 

                                                 
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.