In re SOUNDPOST PARTNERS

 
 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No.  70403 / September 16, 2013 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-15482 
 
 
In the Matter of 
 
SOUNDPOST 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 
  
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 Soundpost Partners, LP. (“Soundpost” 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 Soundpost, a New York-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. On two occasions, from May 2011 through June 2011, Soundpost 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.  These violations collectively 
resulted in profits of $45,135.  
 
Respondent 
 
 3. Soundpost Partners, LP is a Delaware limited partnership with its principal place of 
business in New York, New York.  Since March 2012, Soundpost has had exempt adviser 
reporting status with the Commission; it was not registered with the Commission at the time of the 
violations.  Soundpost manages two domestic funds and has $65 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 
Soundpost’s Violations of Rule 105 of Regulation M 
 
 6. On June 21, 2011, Soundpost sold short 100,000 shares of American Capital 
Agency Corp. (“AGNC”) during the restricted period at $28.5476 per share.  On June 23, 2011, 
AGNC announced the pricing of a follow-on offering of its common stock at $27.90 per share.  
Soundpost received an allocation of 30,000 shares in that offering.  The difference between 
Soundpost’s proceeds from the restricted period short sales of AGNC shares and the price paid for 
the 30,000 shares received in the offering was $19,428.  Thus, Soundpost’s participation in the 
AGNC offering netted total profits of $19,428. 
 
 7. On May 20, 2011, Soundpost sold short 10,200 shares of MakeMyTrip Ltd. 
(“MMYT”) during the restricted period at an average price of $26.5203 per share.  On May 27, 
2011,  MMYT announced the pricing of a follow-on offering of its common stock at $24.00 per 
share.  Soundpost received an allocation of 20,000 shares in that offering.  The difference between 
Soundpost’s proceeds from the restricted period short sales of MMYT shares and the price paid for 
the 20,000 shares received in the offering was $25,707.  Thus, Soundpost’s participation in the 
MMYT offering netted total profits of $25,707.           
 
  8. In total, Soundpost’s violations of Rule 105 resulted in profits of $45,135. 
 
Violations 
 
 9. As a result of the conduct described above, Soundpost violated Rule 105 of 
Regulation M under the Exchange Act.  
 
Soundpost’s Remedial Efforts 
10. 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 Soundpost’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 21C of the Exchange Act, Respondent Soundpost cease and 
desist from committing or causing any violations and any future violations of Rule 105 of 
Regulation M of the Exchange Act;   
 
 B. Soundpost shall within fourteen (14) days of the entry of this Order, pay 
disgorgement of $45,135, prejudgment interest of $3,180.85, and a civil money penalty in the 
amount of $65,000 (for a total of $113,315.85) to the United States Treasury.  If timely payment is 

 4 
not made, additional interest shall accrue pursuant to SEC Rule of Practice 600.  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 
Soundpost 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.  70403 / September 16, 2013 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-15482 

 

 

In the Matter of 

 

SOUNDPOST 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 

  

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 Soundpost Partners, LP. (“Soundpost” 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 Soundpost, a New York-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. On two occasions, from May 2011 through June 2011, Soundpost 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.  These violations collectively 

resulted in profits of $45,135.  

 

Respondent 

 

 3. Soundpost Partners, LP is a Delaware limited partnership with its principal place of 

business in New York, New York.  Since March 2012, Soundpost has had exempt adviser 

reporting status with the Commission; it was not registered with the Commission at the time of the 

violations.  Soundpost manages two domestic funds and has $65 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 

Soundpost’s Violations of Rule 105 of Regulation M 

 

 6. On June 21, 2011, Soundpost sold short 100,000 shares of American Capital 

Agency Corp. (“AGNC”) during the restricted period at $28.5476 per share.  On June 23, 2011, 

AGNC announced the pricing of a follow-on offering of its common stock at $27.90 per share.  

Soundpost received an allocation of 30,000 shares in that offering.  The difference between 

Soundpost’s proceeds from the restricted period short sales of AGNC shares and the price paid for 

the 30,000 shares received in the offering was $19,428.  Thus, Soundpost’s participation in the 

AGNC offering netted total profits of $19,428. 

 

 7. On May 20, 2011, Soundpost sold short 10,200 shares of MakeMyTrip Ltd. 

(“MMYT”) during the restricted period at an average price of $26.5203 per share.  On May 27, 

2011,  MMYT announced the pricing of a follow-on offering of its common stock at $24.00 per 

share.  Soundpost received an allocation of 20,000 shares in that offering.  The difference between 

Soundpost’s proceeds from the restricted period short sales of MMYT shares and the price paid for 

the 20,000 shares received in the offering was $25,707.  Thus, Soundpost’s participation in the 

MMYT offering netted total profits of $25,707.           

 

  8. In total, Soundpost’s violations of Rule 105 resulted in profits of $45,135. 

 

Violations 

 

 9. As a result of the conduct described above, Soundpost violated Rule 105 of 

Regulation M under the Exchange Act.  

 

Soundpost’s Remedial Efforts 

10. 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 Soundpost’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

 

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

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

Regulation M of the Exchange Act;   

 

 B. Soundpost shall within fourteen (14) days of the entry of this Order, pay 

disgorgement of $45,135, prejudgment interest of $3,180.85, and a civil money penalty in the 

amount of $65,000 (for a total of $113,315.85) to the United States Treasury.  If timely payment is 



 4 

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

Soundpost 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.