SEC v. HITE HEDGE ASSET MANAGEMENT LLC; HITE HEDGE LP; HITE HEDGE II LP; and HITE HEDGE OFFSHORE LTD., No. 1:23-cv-10351, District of Massachusetts (Feb. 21, 2023) — Complaint
raw: SEC v. HITE HEDGE ASSET MANAGEMENT
SEC v. HITE HEDGE ASSET MANAGEMENT, No. 1:23-cv-10351 (Feb. 21, 2023)
The SEC sued HITE Hedge Asset Management LLC for violating Rule 105 of Regulation M through prohibited short selling and subsequent purchases of Pioneer Natural Resources stock.
HITE Hedge Asset Management LLC violated Rule 105 of Regulation M by short selling Pioneer Natural Resources Company stock and purchasing the same securities in a secondary offering during a restricted period. This conduct resulted in $111,629.52 in ill-gotten gains for the defendant's funds. The SEC is seeking civil money penalties against HITE and the disgorgement of profits from relief defendants.
The Securities and Exchange Commission has filed a complaint in the U.S. District Court for the District of Massachusetts against HITE Hedge Asset Management LLC and several relief defendants. The SEC alleges that HITE violated Rule 105 of Regulation M by short selling Pioneer Natural Resources Company common stock on May 7, 2021, and subsequently purchasing shares in a secondary offering on May 10, 2021. This prohibited trading occurred within the rule's restricted period and generated $111,629.52 in ill-gotten gains for the funds. The Commission is seeking civil money penalties against HITE and seeks to recover illegal profits from relief defendants HITE Hedge LP, HITE Hedge II LP, and HITE Hedge Offshore Ltd. HITE has indicated it plans to voluntarily reimburse the relief defendants for the amount of disgorgement and prejudgment interest.
Extracted insights
- $1.55B $1.55 billion ≥$1B
- $112K $111,629 $100K–$1M
- $53K $53,417 $10K–$100K
- $34K $33,767 $10K–$100K
- $15K $14,650 $10K–$100K
- $6K $6,208 <$10K
- $4K $3,585 <$10K
- $168 $167.83 <$10K
- $161 $161 <$10K
- company civil money penalties and other relief against hite hedge asset management llc
- company hite hedge asset management llc
- agency Securities and Exchange Commission
- court united states district court district of massachusetts
- Securities And Exchange Commission alleges Hite Hedge Asset Management LLC violated Rule 105 of Regulation M under the Securities Exchange Act of 1934
- Hite Hedge Asset Management LLC sold short common stock of Pioneer Natural Resources Company in the Funds' accounts
- Hite Hedge Asset Management LLC purchased shares of Pioneer common stock for the Funds in a secondary offering during Rule 105's restricted period
- Hite Hedge Asset Management LLC generated ill-gotten gains of $111,629.52 for the Funds
- Hite Hedge Asset Management LLC consolidated Hite Hedge QP LP into Hite Energy LP
- Hite Hedge Asset Management LLC consolidated Hite MLP LP into Hite Hedge LP
- Securities And Exchange Commission seeks civil money penalties and other relief against Hite Hedge Asset Management LLC
- Securities And Exchange Commission seeks relief against Relief Defendants for retaining illegally-derived profits
- Hite Hedge Asset Management LLC represents it plans to voluntarily reimburse Relief Defendants for disgorgement and prejudgment interest
- United States District Court District of Massachusetts has jurisdiction over this action pursuant to Sections 21(d) and 27 of the Exchange Act
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.
HITE HEDGE ASSET MANAGEMENT
LLC,
Defendant,
and
HITE HEDGE LP, HITE HEDGE II LP
and HITE HEDGE OFFSHORE LTD.,
Relief Defendants.
Civil Action No.
JURY TRIAL DEMANDED
COMPLAINT
Plaintiff, Securities and Exchange Commission (the “Commission”), alleges the
following against the defendant and relief defendants:
SUMMARY
1. This case concerns the violation of Rule 105 of Regulation M under the Securities
Exchange Act of 1934 (the “Exchange Act”) [17 C.F.R. § 242.105] (“Rule 105”) by HITE
Hedge Asset Management LLC (“HITE”). Rule 105 is designed to prevent potentially
manipulative short selling just before the pricing of follow-on and secondary offerings, thereby
allowing independent market forces to determine the price of those offerings. Rule 105 prohibits
any person who makes a short sale of securities, during a defined restricted period before the
pricing of an offering, from purchasing the same securities in that offering. Rule 105 prohibits
such conduct irrespective of the short seller’s intent in effecting the short sale.
2
2. In May 2021, HITE acted as the investment adviser to HITE Hedge Energy LP,
HITE Hedge LP, HITE Hedge Offshore Ltd., HITE Hedge QP LP, and HITE MLP LP
(collectively, the “Funds”).
3. On May 7, 2021, HITE sold short common stock of Pioneer Natural Resources
Company (“Pioneer”) in the Funds’ accounts. On May 10, 2021, within Rule 105’s restricted
period, HITE purchased shares of Pioneer common stock for the Funds in a secondary offering
from a participating underwriter, without qualifying for an exception from the prohibition in
Rule 105. HITE’s conduct resulted in ill-gotten gains to the Funds of $111,629.52.
4. In June 2022, HITE consolidated HITE Hedge QP LP into HITE Energy LP.
HITE Energy LP’s name was subsequently changed to HITE Hedge II LP. HITE also
consolidated HITE MLP LP into HITE Hedge LP. As a result of the consolidation, HITE is now
an investment adviser to HITE Hedge LP, HITE Hedge II LP and HITE Hedge Offshore Ltd.
(the “Relief Defendants”).
5. By virtue of the foregoing conduct and as further alleged herein, HITE violated
Rule 105.
6. The Commission seeks a final judgment ordering civil money penalties and such
other relief as the Court may deem appropriate.
7. The Commission also seeks relief against the Relief Defendants, which received
the profits of HITE’s illegal trading and should not be entitled to retain those illegally-derived
profits. HITE has represented to the Commission’s staff that it plans to voluntarily reimburse the
Relief Defendants for the amount equal to disgorgement and prejudgement interest.
JURISDICTION AND VENUE
8. This Court has jurisdiction over this action pursuant to Sections 21(d) and 27 of
3
the Exchange Act [15 U.S.C. §§78u(d) and 78aa].
9. Venue lies in this Court pursuant to Section 27 of the Exchange Act [15 U.S.C.
§78aa]. Certain of the acts, practices, transactions and courses of business alleged in this
Complaint occurred within the District of Massachusetts, and were effected, directly or
indirectly, by making use of means or instrumentalities of transportation or communication in
interstate commerce, or the mails. For example, HITE directed all of the securities transactions
at issue in this case from Massachusetts.
DEFENDANT
10. HITE Hedge Asset Management LLC is a limited liability company organized
under the laws of Delaware and located in Quincy, Massachusetts. HITE is registered with the
Commission as an investment adviser, and advises HITE Hedge LP, HITE Hedge II LP and
HITE Hedge Offshore Ltd., among other private fund clients. As of December 31, 2021, HITE
had approximately $1.55 billion in regulatory assets under management.
RELIEF DEFENDANTS
11. HITE Hedge LP is a Delaware limited partnership. HITE Hedge LP is a private
fund client of HITE.
12. HITE Hedge II LP is a Delaware limited partnership. HITE Hedge II LP is a
private fund client of HITE.
13. HITE Hedge Offshore Ltd. is Cayman Islands exempted company. HITE Hedge
Offshore Ltd. is a private fund client of HITE.
OVERVIEW OF RULE 105
14. Rule 105 makes it unlawful for a person to purchase equity securities from an
underwriter, broker or dealer participating in a covered public offering if that person sold short
4
the security that is the subject of the offering during the restricted period as 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 1-E and ending
with pricing. 17 C.F.R. § 242.105(a)(1) and (a)(2). Rule 105 applies to secondary and follow-on
offerings. 72 Fed. Reg. 45094.
15. T
he Commission adopted Rule 105 “to foster secondary and follow-on offering
prices that are determined by independent market dynamics and not by potentially manipulative
activity.” 72 Fed. Reg. 45094. Rule 105 is prophylactic and prohibits the conduct irrespective of
the short seller’s intent in effecting the short sale. Id.
FACTS
16. On Friday, May 7, 2021, HITE sold short a combined total of 17,428 shares of
Pioneer common stock at an average price of $167.83 per share in the Funds’ accounts.
17. On Monday, May 10, 2021, Pioneer filed a preliminary prospectus supplement to
a shelf registration statement previously filed on August 5, 2020 for a secondary offering of its
common stock to be priced after the market closed on Monday, May 10, 2021 (the “Offering”).
18. On the same day, HITE received several messages from a participating
underwriter notifying HITE about the Offering and soliciting HITE to participate in the Offering.
One message referred to the Offering as a “block trade.” A second message described the
Offering as a “100% secondary” offering, and stated that participants represented their eligibility
to receive an allocation in accordance with Rule 105 by submitting an order for an allocation in
5
the Offering.
19. After the market closed on Monday, May 10, 2021, Pioneer priced the Offering at
$161 per share.
20. The short sales that HITE effected for the Funds occurred within the Rule 105
restricted period, which ran from Tuesday, May 4, 2021 through Monday, May 10, 2021.
21. HITE did not have any formal written policies relating to Rule 105. However,
HITE’s former Chief Compliance Officer (“CCO”) implemented a practice whereby traders were
required to seek the CCO’s written approval prior to participating in any public offering.
22. Consistent with that general practice, HITE’s trader sought and obtained approval
to participate in the Offering from the CCO.
23. The CCO approved HITE’s participation in the Offering because he mistakenly
believed that Rule 105 did not apply to the Offering.
24. HITE then submitted an indication of interest to a participating underwriter on
behalf of the Funds to purchase 20,000 shares in the Offering after market close on Monday,
May 10, 2021.
25. On Tuesday, May 11, 2021, HITE received an allocation of 20,000 shares in the
Offering in the Funds’ accounts.
26. The difference between the price at which the Funds sold short shares of Pioneer
common stock during the restricted period and the price at which the Funds purchased an equal
number of shares in the Offering was $111,629.52.
27. Thus, the Funds received $111,629.52 in total profits by participating in the
Offering, of which $33,767.52 was received by HITE Energy LP, $14,650.35 was received by
HITE Hedge LP, $53,417.43 was received by HITE Hedge Offshore Ltd., $6,208.47 was
6
received by HITE Hedge QP LP, and $3,585.75 was received by HITE MLP LP.
28. The Funds did not have a legitimate claim to these profits from illegal trades.
29. On September 21, 2021, a participating underwriter notified HITE that HITE
participated in the Offering after selling short shares of Pioneer during the restricted period in
possible violation of Rule 105.
30. Upon being informed of its purchase within Rule 105’s restricted period, HITE
did not conduct a review of its prior trading history to identify other possible Rule 105 violations
and did not implement a written Rule 105 policy or otherwise enhance its compliance measures
related to Rule 105 at that time.
31. During the course of the Commission staff’s investigation, HITE implemented a
written Rule 105 policy and conducted a subsequent review of its trading history, which
identified no other Rule 105 violations. HITE also replaced its CCO in November 2021 and
hired an additional compliance staff member in June 2022.
32. In June 2022, during the course of the Commission staff’s investigation, HITE
consolidated the assets of certain private fund clients. As a result of the consolidation, HITE
Hedge LP received the assets of HITE MLP LP, and HITE Hedge II LP received the assets of
HITE Hedge QP LP.
FIRST CLAIM FOR RELIEF
Violation of Rule 105 of Regulation M
(against Defendant HITE)
33. Paragraphs 1 through 32 above are re-alleged and incorporated by reference as if
fully set forth herein.
34. In connection with an offering of equity securities for cash pursuant to a
registration statement filed under the Securities Act of 1933, HITE directed short sales of
7
securities that were the subject of the Offering within the Rule 105 restricted period, and
purchased the offered securities from an underwriter participating in the Offering.
35. By reason of the foregoing, HITE violated Rule 105 of Regulation M under the
Exchange Act [17 C.F.R. § 242.105].
SECOND CLAIM FOR RELIEF
OTHER EQUITABLE RELIEF (against Relief Defendants)
36. Paragraphs 1 through 32 above are re-alleged and incorporated by reference as if
fully set forth herein.
37. Section 21(d)(5) of the Exchange Act [15 U.S.C. §78u(d)(5)] states “[i]n any
action or proceeding brought or instituted by the Commission under any provision of the
securities laws, the Commission may seek, and any Federal court may grant, any equitable relief
that may be appropriate or necessary for the benefit of investors.”
38. Section 21(d)(7) of the Exchange Act [15 U.S.C. §78u(d)(7)] states “[i]n any
action or proceeding brought by the Commission under any provision of the securities laws,
the Commission may seek, and any Federal court may order, disgorgement.”
39. The Relief Defendants, either directly or indirectly, received profits derived from
HITE’s illegal trading under circumstances dictating that, in equity and good conscience, they
should not be allowed to retain.
40. As a result, the Relief Defendants are liable to disgorge, and should be required to
return, their ill-gotten gains.
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court:
A. Order the Relief Defendants to disgorge, with prejudgment interest, all ill-gotten
gains obtained by reason of the unlawful conduct alleged in the Complaint;
8
B. Order Defendant HITE to pay civil penalties under Section 21(d)(3) of the
Exchange Act [15 U.S.C. §78u(d)(3)];
C. Retain jurisdiction over this action to implement and carry out the terms of all
orders and decrees that may be entered; and
D. Grant such other and further relief as this Court may deem just and proper.
JURY DEMAND
The Commission demands a jury in this matter for all claims so triable.
DATED: February 17, 2023 Respectfully submitted,
/s/ Richard M. Harper II____________
Anne F. Hancock (Mass. Bar No. 691884)
Dawn Edick (DC Bar No. 641659)
Amy Gwiazda (Mass. Bar No. 663494)
Richard M. Harper II (Mass. Bar No. 634782)
Martin F. Healey (Mass. Bar No. 227550)
SECURITIES AND EXCHANGE COMMISSION
Boston Regional Office
33 Arch St., 24
th
Floor
Boston, MA 02110
Phone: (617) 573-4560 (Hancock direct)
(617) 573 8940 (Edick direct)
(617) 573-8839 (Gwiazda direct)
(617) 573-8979 (Harper direct)
Fax: (617) 573-4590 (fax)
[email protected]
(Hancock email)
[email protected] (Edick email)
[email protected] (Gwiazda email)
[email protected] (Harper email)UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.
HITE HEDGE ASSET MANAGEMENT
LLC,
Defendant,
and
HITE HEDGE LP, HITE HEDGE II LP
and HITE HEDGE OFFSHORE LTD.,
Relief Defendants.
Civil Action No.
JURY TRIAL DEMANDED
COMPLAINT
Plaintiff, Securities and Exchange Commission (the “Commission”), alleges the
following against the defendant and relief defendants:
SUMMARY
1. This case concerns the violation of Rule 105 of Regulation M under the Securities
Exchange Act of 1934 (the “Exchange Act”) [17 C.F.R. § 242.105] (“Rule 105”) by HITE
Hedge Asset Management LLC (“HITE”). Rule 105 is designed to prevent potentially
manipulative short selling just before the pricing of follow-on and secondary offerings, thereby
allowing independent market forces to determine the price of those offerings. Rule 105 prohibits
any person who makes a short sale of securities, during a defined restricted period before the
pricing of an offering, from purchasing the same securities in that offering. Rule 105 prohibits
such conduct irrespective of the short seller’s intent in effecting the short sale.
Case 1:23-cv-10351 Document 1 Filed 02/17/23 Page 1 of 8
2
2. In May 2021, HITE acted as the investment adviser to HITE Hedge Energy LP,
HITE Hedge LP, HITE Hedge Offshore Ltd., HITE Hedge QP LP, and HITE MLP LP
(collectively, the “Funds”).
3. On May 7, 2021, HITE sold short common stock of Pioneer Natural Resources
Company (“Pioneer”) in the Funds’ accounts. On May 10, 2021, within Rule 105’s restricted
period, HITE purchased shares of Pioneer common stock for the Funds in a secondary offering
from a participating underwriter, without qualifying for an exception from the prohibition in
Rule 105. HITE’s conduct resulted in ill-gotten gains to the Funds of $111,629.52.
4. In June 2022, HITE consolidated HITE Hedge QP LP into HITE Energy LP.
HITE Energy LP’s name was subsequently changed to HITE Hedge II LP. HITE also
consolidated HITE MLP LP into HITE Hedge LP. As a result of the consolidation, HITE is now
an investment adviser to HITE Hedge LP, HITE Hedge II LP and HITE Hedge Offshore Ltd.
(the “Relief Defendants”).
5. By virtue of the foregoing conduct and as further alleged herein, HITE violated
Rule 105.
6. The Commission seeks a final judgment ordering civil money penalties and such
other relief as the Court may deem appropriate.
7. The Commission also seeks relief against the Relief Defendants, which received
the profits of HITE’s illegal trading and should not be entitled to retain those illegally-derived
profits. HITE has represented to the Commission’s staff that it plans to voluntarily reimburse the
Relief Defendants for the amount equal to disgorgement and prejudgement interest.
JURISDICTION AND VENUE
8. This Court has jurisdiction over this action pursuant to Sections 21(d) and 27 of
Case 1:23-cv-10351 Document 1 Filed 02/17/23 Page 2 of 8
3
the Exchange Act [15 U.S.C. §§78u(d) and 78aa].
9. Venue lies in this Court pursuant to Section 27 of the Exchange Act [15 U.S.C.
§78aa]. Certain of the acts, practices, transactions and courses of business alleged in this
Complaint occurred within the District of Massachusetts, and were effected, directly or
indirectly, by making use of means or instrumentalities of transportation or communication in
interstate commerce, or the mails. For example, HITE directed all of the securities transactions
at issue in this case from Massachusetts.
DEFENDANT
10. HITE Hedge Asset Management LLC is a limited liability company organized
under the laws of Delaware and located in Quincy, Massachusetts. HITE is registered with the
Commission as an investment adviser, and advises HITE Hedge LP, HITE Hedge II LP and
HITE Hedge Offshore Ltd., among other private fund clients. As of December 31, 2021, HITE
had approximately $1.55 billion in regulatory assets under management.
RELIEF DEFENDANTS
11. HITE Hedge LP is a Delaware limited partnership. HITE Hedge LP is a private
fund client of HITE.
12. HITE Hedge II LP is a Delaware limited partnership. HITE Hedge II LP is a
private fund client of HITE.
13. HITE Hedge Offshore Ltd. is Cayman Islands exempted company. HITE Hedge
Offshore Ltd. is a private fund client of HITE.
OVERVIEW OF RULE 105
14. Rule 105 makes it unlawful for a person to purchase equity securities from an
underwriter, broker or dealer participating in a covered public offering if that person sold short
Case 1:23-cv-10351 Document 1 Filed 02/17/23 Page 3 of 8
4
the security that is the subject of the offering during the restricted period as 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 1-E and ending
with pricing. 17 C.F.R. § 242.105(a)(1) and (a)(2). Rule 105 applies to secondary and follow-on
offerings. 72 Fed. Reg. 45094.
15. The Commission adopted Rule 105 “to foster secondary and follow-on offering
prices that are determined by independent market dynamics and not by potentially manipulative
activity.” 72 Fed. Reg. 45094. Rule 105 is prophylactic and prohibits the conduct irrespective of
the short seller’s intent in effecting the short sale. Id.
FACTS
16. On Friday, May 7, 2021, HITE sold short a combined total of 17,428 shares of
Pioneer common stock at an average price of $167.83 per share in the Funds’ accounts.
17. On Monday, May 10, 2021, Pioneer filed a preliminary prospectus supplement to
a shelf registration statement previously filed on August 5, 2020 for a secondary offering of its
common stock to be priced after the market closed on Monday, May 10, 2021 (the “Offering”).
18. On the same day, HITE received several messages from a participating
underwriter notifying HITE about the Offering and soliciting HITE to participate in the Offering.
One message referred to the Offering as a “block trade.” A second message described the
Offering as a “100% secondary” offering, and stated that participants represented their eligibility
to receive an allocation in accordance with Rule 105 by submitting an order for an allocation in
Case 1:23-cv-10351 Document 1 Filed 02/17/23 Page 4 of 8
5
the Offering.
19. After the market closed on Monday, May 10, 2021, Pioneer priced the Offering at
$161 per share.
20. The short sales that HITE effected for the Funds occurred within the Rule 105
restricted period, which ran from Tuesday, May 4, 2021 through Monday, May 10, 2021.
21. HITE did not have any formal written policies relating to Rule 105. However,
HITE’s former Chief Compliance Officer (“CCO”) implemented a practice whereby traders were
required to seek the CCO’s written approval prior to participating in any public offering.
22. Consistent with that general practice, HITE’s trader sought and obtained approval
to participate in the Offering from the CCO.
23. The CCO approved HITE’s participation in the Offering because he mistakenly
believed that Rule 105 did not apply to the Offering.
24. HITE then submitted an indication of interest to a participating underwriter on
behalf of the Funds to purchase 20,000 shares in the Offering after market close on Monday,
May 10, 2021.
25. On Tuesday, May 11, 2021, HITE received an allocation of 20,000 shares in the
Offering in the Funds’ accounts.
26. The difference between the price at which the Funds sold short shares of Pioneer
common stock during the restricted period and the price at which the Funds purchased an equal
number of shares in the Offering was $111,629.52.
27. Thus, the Funds received $111,629.52 in total profits by participating in the
Offering, of which $33,767.52 was received by HITE Energy LP, $14,650.35 was received by
HITE Hedge LP, $53,417.43 was received by HITE Hedge Offshore Ltd., $6,208.47 was
Case 1:23-cv-10351 Document 1 Filed 02/17/23 Page 5 of 8
6
received by HITE Hedge QP LP, and $3,585.75 was received by HITE MLP LP.
28. The Funds did not have a legitimate claim to these profits from illegal trades.
29. On September 21, 2021, a participating underwriter notified HITE that HITE
participated in the Offering after selling short shares of Pioneer during the restricted period in
possible violation of Rule 105.
30. Upon being informed of its purchase within Rule 105’s restricted period, HITE
did not conduct a review of its prior trading history to identify other possible Rule 105 violations
and did not implement a written Rule 105 policy or otherwise enhance its compliance measures
related to Rule 105 at that time.
31. During the course of the Commission staff’s investigation, HITE implemented a
written Rule 105 policy and conducted a subsequent review of its trading history, which
identified no other Rule 105 violations. HITE also replaced its CCO in November 2021 and
hired an additional compliance staff member in June 2022.
32. In June 2022, during the course of the Commission staff’s investigation, HITE
consolidated the assets of certain private fund clients. As a result of the consolidation, HITE
Hedge LP received the assets of HITE MLP LP, and HITE Hedge II LP received the assets of
HITE Hedge QP LP.
FIRST CLAIM FOR RELIEF
Violation of Rule 105 of Regulation M
(against Defendant HITE)
33. Paragraphs 1 through 32 above are re-alleged and incorporated by reference as if
fully set forth herein.
34. In connection with an offering of equity securities for cash pursuant to a
registration statement filed under the Securities Act of 1933, HITE directed short sales of
Case 1:23-cv-10351 Document 1 Filed 02/17/23 Page 6 of 8
7
securities that were the subject of the Offering within the Rule 105 restricted period, and
purchased the offered securities from an underwriter participating in the Offering.
35. By reason of the foregoing, HITE violated Rule 105 of Regulation M under the
Exchange Act [17 C.F.R. § 242.105].
SECOND CLAIM FOR RELIEF
OTHER EQUITABLE RELIEF (against Relief Defendants)
36. Paragraphs 1 through 32 above are re-alleged and incorporated by reference as if
fully set forth herein.
37. Section 21(d)(5) of the Exchange Act [15 U.S.C. §78u(d)(5)] states “[i]n any
action or proceeding brought or instituted by the Commission under any provision of the
securities laws, the Commission may seek, and any Federal court may grant, any equitable relief
that may be appropriate or necessary for the benefit of investors.”
38. Section 21(d)(7) of the Exchange Act [15 U.S.C. §78u(d)(7)] states “[i]n any
action or proceeding brought by the Commission under any provision of the securities laws,
the Commission may seek, and any Federal court may order, disgorgement.”
39. The Relief Defendants, either directly or indirectly, received profits derived from
HITE’s illegal trading under circumstances dictating that, in equity and good conscience, they
should not be allowed to retain.
40. As a result, the Relief Defendants are liable to disgorge, and should be required to
return, their ill-gotten gains.
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court:
A. Order the Relief Defendants to disgorge, with prejudgment interest, all ill-gotten
gains obtained by reason of the unlawful conduct alleged in the Complaint;
Case 1:23-cv-10351 Document 1 Filed 02/17/23 Page 7 of 8
8
B. Order Defendant HITE to pay civil penalties under Section 21(d)(3) of the
Exchange Act [15 U.S.C. §78u(d)(3)];
C. Retain jurisdiction over this action to implement and carry out the terms of all
orders and decrees that may be entered; and
D. Grant such other and further relief as this Court may deem just and proper.
JURY DEMAND
The Commission demands a jury in this matter for all claims so triable.
DATED: February 17, 2023 Respectfully submitted,
/s/ Richard M. Harper II____________
Anne F. Hancock (Mass. Bar No. 691884)
Dawn Edick (DC Bar No. 641659)
Amy Gwiazda (Mass. Bar No. 663494)
Richard M. Harper II (Mass. Bar No. 634782)
Martin F. Healey (Mass. Bar No. 227550)
SECURITIES AND EXCHANGE COMMISSION
Boston Regional Office
33 Arch St., 24th Floor
Boston, MA 02110
Phone: (617) 573-4560 (Hancock direct)
(617) 573 8940 (Edick direct)
(617) 573-8839 (Gwiazda direct)
(617) 573-8979 (Harper direct)
Fax: (617) 573-4590 (fax)
[email protected] (Hancock email)
[email protected] (Edick email)
[email protected] (Gwiazda email)
[email protected] (Harper email)
Case 1:23-cv-10351 Document 1 Filed 02/17/23 Page 8 of 8
mailto:[email protected]
mailto:[email protected]
mailto:[email protected]
mailto:[email protected]