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SEC has questions about Dallas hedge fund's trades


Date: Friday, March 26, 2010
Author: News for Dallas

A Dallas hedge fund managing $4.9 billion has received an informal inquiry from the Securities and Exchange Commission asking about trades that bet the price of newly issued shares would fall.

Carlson Capital LP acknowledged the inquiry in a statement Thursday.

The SEC wants to know about trades by Carlson and a New Jersey hedge fund related to four stock offerings under SEC Rule 105, a law intended to curb stock price manipulation. The inquiry was first reported by The Wall Street Journal.

"Carlson Capital has been cooperating voluntarily and fully with the SEC relating to an inquiry in connection with Rule 105 and will continue to do so," a spokesman for the fund said.

The trades dealt with short sales of newly issued stock, in which a fund or investor technically borrows shares of a company in hopes they fall in value. The SEC believes the short sales can interfere with company stock offerings.

SEC spokesman John Nester said the agency wouldn't comment on the inquiry, saying it as a policy doesn't confirm or deny investigations.