SEC Charges Former SG Cowen Managing Director with Insider Trading and Fraud in Connection with "Pipe" Offerings
Guillaume Pollet, a former SG Cowen managing director, committed insider trading and fraud by short selling stocks of ten companies prior to PIPE offerings using confidential information, generating over $4 million in illicit profits while falsely assuring issuers SG Cowen would not short their shares, leading to SEC charges under Sections 17(a) and 10(b) and Rule 10b-5.
The SEC charged Guillaume Pollet, a former managing director of SG Cowen & Co., with insider trading and fraud for short selling the stocks of ten public companies before the closing of private investment in public equity (PIPE) transactions, using non-public information obtained in his role managing proprietary investments. His illicit trades generated over $4 million in profits for SG Cowen, while the firm falsely represented to PIPE issuers that it would not short their shares and that it held PIPE securities with investment intent—directly contradicting Pollet’s pre-transaction short sales. The SEC alleged violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5, seeking injunctive relief, disgorgement of all ill-gotten gains plus interest, and civil penalties.
Guillaume Pollet, a former managing director of SG Cowen & Co., engaged in insider trading and fraud by short selling the publicly traded shares of ten companies prior to the closing of private investment in public equity (PIPE) transactions, using non-public information he obtained while overseeing SG Cowen’s proprietary PIPE investments. His trades generated over $4 million in illicit profits for the firm, even as SG Cowen—acting in some cases as the investment banker for these same issuers—repeatedly assured PIPE companies that it would not short their stock and that it acquired PIPE securities with genuine investment intent. These representations were knowingly false, as Pollet had already initiated short positions before the transactions closed, creating a severe conflict of interest and breach of fiduciary duty. The SEC filed its complaint in the U.S. District Court for the Eastern District of New York, alleging violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The Commission is seeking injunctive relief, disgorgement of all ill-gotten gains with pre-judgment interest, and civil penalties, emphasizing the egregious nature of the misconduct given SG Cowen’s dual role as both advisor and trader. The investigation, supported by the U.S. Attorney’s Office for the Eastern District of New York and the FBI, remains ongoing, underscoring the SEC’s commitment to policing abuse in PIPE financing markets. This case serves as a stark warning to financial intermediaries that misusing confidential information and making false representations to issuers will be met with aggressive enforcement.
Extracted insights
- $4.00M $4 million $1M–$10M
- person david rosenfeld
- company former managing director of sg cowen & co.
- person guillaume pollet
- scheme_term guillaume pollet with insider trading and fraud
- person mark k. schonfeld
- agency Securities and Exchange Commission
- company sg cowen & co.
- court united states district court for the eastern district of new york
- SEC charged Guillaume Pollet with insider trading and fraud
- Guillaume Pollet was former managing director of SG Cowen & Co.
- Guillaume Pollet engaged in short selling of stock prior to PIPE transaction closes
- Guillaume Pollet traded in shares of ten public companies during 2001
- SG Cowen & Co. locked in $4 million in trading profits from Pollet's illicit trading
- Guillaume Pollet violated Section 17(a) of the Securities Act of 1933
- Guillaume Pollet violated Section 10(b) of the Securities Exchange Act of 1934
- Guillaume Pollet violated Rule 10b-5
- SEC filed complaint in United States District Court for the Eastern District of New York
- SG Cowen & Co. represented to PIPE issuers that it would not short sell securities prior to PIPE transaction close
- SG Cowen & Co. represented to PIPE issuers that it was acquiring PIPE securities with investment intent
- SEC is seeking injunctive relief, disgorgement of ill-gotten gains plus pre-judgment interest, and civil penalties
- Mark K. Schonfeld is Director of the Commission's Northeast Regional Office
- David Rosenfeld is Associate Regional Director of the Commission's Northeast Regional Office
SEC CHARGES FORMER SG COWEN MANAGING DIRECTOR WITH INSIDER TRADING AND FRAUD IN CONNECTION WITH "PIPE" OFFERINGS FOR IMMEDIATE RELEASE 2005-61 Washington, D.C., April 21, 2005 - The Securities and Exchange Commission charged Guillaume Pollet, a former managing director of SG Cowen & Co., with insider trading and fraud by short selling the stock of companies prior to the companies closing on a private offering of stock, including offerings in which SG Cowen invested. The private offerings are often referred to as "PIPEs" for "private investment in public equity." At the time of the misconduct, Pollet was in charge of investing SG Cowen proprietary funds in PIPE transactions. The Commission's complaint, filed in the United States District Court for the Eastern District of New York, alleges that during 2001 Pollet traded in the shares of ten public companies that either engaged in, or were contemplating engaging in, PIPE financings after receiving confidential non-public information about the upcoming PIPE transaction. Specifically, Pollet routinely sold short the publicly traded securities of these PIPE issuers prior to the close of the PIPE transaction in order to lock in gains for SG Cowen's proprietary account. As a result of Pollet's illicit trading, SG Cowen locked in over $4 million in trading profits, in addition to other gains SG Cowen made on the transactions. In several instances, SG Cowen also acted as the PIPE issuer's investment banker. The Commission's complaint also alleges that, in several instances, Pollet's short selling was directly contrary to representations that SG Cowen made to PIPE issuers in connection with the PIPE transactions. For example, SG Cowen specifically represented to some of the PIPE issuers that SG Cowen would not short sell the securities of such issuer prior to the close of the PIPE transaction. SG Cowen also represented to each of the PIPE issuers that it was acquiring the PIPE securities with investment intent. SG Cowen made these representations at a time when Pollet had already started to short sell the securities of these PIPE issuers. Mark K. Schonfeld, Director of the Commission's Northeast Regional Office, said, "While PIPE transactions may help a company meet its financing needs, they also create opportunities for fraud. This case sends the message that we will actively patrol this area so that issuers and investors alike can have confidence in these financing vehicles." David Rosenfeld, Associate Regional Director of the Commission's Northeast Regional Office, added: "Individuals who receive confidential information about important financing transactions must refrain from trading based on that information. This case was particularly egregious because there were specific representations made to the PIPE issuers that SG Cowen would not or had not engaged in short selling prior to the close of the transaction." The complaint alleges that through his fraudulent trading Pollet violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission is seeking injunctive relief, disgorgement of all ill-gotten gains plus pre-judgment interest, and civil penalties. The staff acknowledges the assistance of the U.S. Attorney's Office for the Eastern District of New York and the Federal Bureau of Investigation in this matter. The Commission's investigation is continuing. See also: Litigation Release Contact: Mark K. Schonfeld, Regional Director, Northeast Regional Office, (212) 336-1020 David Rosenfeld, Associate Regional Director, Northeast Regional Office, (212) 336-0153 David A. Markowitz, Assistant Regional Director, Northeast Regional Office, (212) 336-0128 http://www.sec.gov/news/press/2005-61.htm Home | Previous Page Modified: 04/21/2005
SEC CHARGES FORMER SG COWEN MANAGING DIRECTOR WITH INSIDER TRADING AND FRAUD IN CONNECTION WITH "PIPE" OFFERINGS FOR IMMEDIATE RELEASE 2005-61 Washington, D.C., April 21, 2005 - The Securities and Exchange Commission charged Guillaume Pollet, a former managing director of SG Cowen & Co., with insider trading and fraud by short selling the stock of companies prior to the companies closing on a private offering of stock, including offerings in which SG Cowen invested. The private offerings are often referred to as "PIPEs" for "private investment in public equity." At the time of the misconduct, Pollet was in charge of investing SG Cowen proprietary funds in PIPE transactions. The Commission's complaint, filed in the United States District Court for the Eastern District of New York, alleges that during 2001 Pollet traded in the shares of ten public companies that either engaged in, or were contemplating engaging in, PIPE financings after receiving confidential non-public information about the upcoming PIPE transaction. Specifically, Pollet routinely sold short the publicly traded securities of these PIPE issuers prior to the close of the PIPE transaction in order to lock in gains for SG Cowen's proprietary account. As a result of Pollet's illicit trading, SG Cowen locked in over $4 million in trading profits, in addition to other gains SG Cowen made on the transactions. In several instances, SG Cowen also acted as the PIPE issuer's investment banker. The Commission's complaint also alleges that, in several instances, Pollet's short selling was directly contrary to representations that SG Cowen made to PIPE issuers in connection with the PIPE transactions. For example, SG Cowen specifically represented to some of the PIPE issuers that SG Cowen would not short sell the securities of such issuer prior to the close of the PIPE transaction. SG Cowen also represented to each of the PIPE issuers that it was acquiring the PIPE securities with investment intent. SG Cowen made these representations at a time when Pollet had already started to short sell the securities of these PIPE issuers. Mark K. Schonfeld, Director of the Commission's Northeast Regional Office, said, "While PIPE transactions may help a company meet its financing needs, they also create opportunities for fraud. This case sends the message that we will actively patrol this area so that issuers and investors alike can have confidence in these financing vehicles." David Rosenfeld, Associate Regional Director of the Commission's Northeast Regional Office, added: "Individuals who receive confidential information about important financing transactions must refrain from trading based on that information. This case was particularly egregious because there were specific representations made to the PIPE issuers that SG Cowen would not or had not engaged in short selling prior to the close of the transaction." The complaint alleges that through his fraudulent trading Pollet violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission is seeking injunctive relief, disgorgement of all ill-gotten gains plus pre-judgment interest, and civil penalties. The staff acknowledges the assistance of the U.S. Attorney's Office for the Eastern District of New York and the Federal Bureau of Investigation in this matter. The Commission's investigation is continuing. See also: Litigation Release Contact: Mark K. Schonfeld, Regional Director, Northeast Regional Office, (212) 336-1020 David Rosenfeld, Associate Regional Director, Northeast Regional Office, (212) 336-0153 David A. Markowitz, Assistant Regional Director, Northeast Regional Office, (212) 336-0128 http://www.sec.gov/news/press/2005-61.htm Home | Previous Page Modified: 04/21/2005