Ex-Hedge Fund Manager Settles SEC PIPE Case for $110,000, 3-Year Ban

WASHINGTON (AP) - A former New York hedge fund manager will pay $110,000 to settle charges of fraudulent trading in three PIPE deals, which are private investments in public equity.

Joseph Spiegel, a former manager for Spinner Asset Management, settled with the Securities and Exchange Commission without admitting or denying the SEC's allegations. In addition to paying a fine, Spiegel, 35 years old, agreed to a three-year ban on working in the investment advisery business.

Spinner advised the Spinner Global Technology Fund, a $200 million hedge fund based in New York, which reached its own settlement with the SEC last year regarding the PIPE deals with Tripath Technology Inc., Hypercom Corp. and Novatel Wireless Inc.

According to the SEC, after the hedge fund agreed to invest in three PIPE deals, Spiegel sold those stocks short using "naked" short sales in Canada, and covered the short positions with shares obtained through the PIPE offering.

Short selling involves sales of borrowed securities, producing profits when prices decline and borrowed shares are replaced at a lower price. So-called "naked" short sellers do not borrow shares before selling them.

The SEC said Spiegel should have known that it was illegal to cover Spinner's short position with shares it obtained from the PIPE offering. While short selling is legal, the hedge fund had promised the PIPE issuers that it would not sell or transfer shares it received.

"This is part of our crackdown on abuses in the PIPEs market," said Robert Kaplan, an assistant director in the SEC's Washington office.

Spiegel's attorney, Niki Warin, declined to comment on the matter.