In re OMEGA ADVISORS

 
 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 76142 / October 14, 2015 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-16896 
 
 
In the Matter of 
 
OMEGA ADVISORS, INC. 
 
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 Omega Advisors, Inc. (“Omega” 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 a violation of Rule 105 of Regulation M of the 
Exchange Act by Omega, a New York-based registered investment adviser.  Rule 105 prohibits 
selling short an equity security that is the subject of certain public offerings and purchasing the 
offered security from an underwriter or broker or dealer participating in the offering, if such short 
sale was effected during the restricted period as defined therein. 
 
 2. On January 15, 2015, Omega bought offering shares from an underwriter or broker 
or dealer participating in a follow-on public offering after having sold short the same security 
during the Rule 105 restricted period.  The violation resulted in profits of $68,340.  
 
Respondent 
 
 3. Omega Advisors, Inc. is a corporation incorporated in Delaware with its principal 
place of business in New York, New York.  Omega Advisors, Inc. has been registered with the 
Commission as an investment adviser since March 1993.  The firm provides advisory services to 
three domestic funds and four foreign funds and has total assets under management in excess of 
$9 billion. 
 
Legal Framework 
 
4. Rule 105 makes it unlawful for a person to purchase equity securities in certain 
public offerings from an underwriter, broker, or dealer participating in the 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 Form 1-A or Form 1-E and ending with the 
pricing.  17 C.F.R. § 242.105(a)(1) and (a)(2).     
 
5. 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. 
 
 
                                                 
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 
Omega’s Violation of Rule 105 of Regulation M 
 
 6.   On January 12, 2015, Omega sold short 150,000 shares of Southwestern Energy 
Co. (“SWN”) during the restricted period at a price of $23.6834 per share.  On January 15, 2015, 
SWN announced the pricing of a follow-on offering of its common stock at $23.00 per share.  
Omega received an allocation of 100,000 shares in that offering.  Thus, Omega’s participation in 
the SWN offering resulted in total profits of $68,340.   
 
  7. In total, Omega’s violation of Rule 105 resulted in profits of $68,340. 
 
Violation 
 
 8. As a result of the conduct described above, Omega violated Rule 105 of Regulation 
M under the Exchange Act.  
 
Omega’s Remedial Efforts & Cooperation 
9. 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 Omega’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 21C of the Exchange Act, Respondent Omega cease and desist 
from committing or causing any violations and any future violations of Rule 105 of Regulation M of 
the Exchange Act;   
 
 B. Omega shall within fourteen (14) days of the entry of this Order, pay disgorgement 
of $68,340, prejudgment interest of $686.58, and a civil money penalty in the amount of $65,000 
(for a total of $134,026.58) to the Securities and Exchange Commission for transfer to the general 
fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely payment 
is not made on the disgorgement amount, additional interest shall accrue pursuant to SEC Rule of 
Practice 600.  If timely payment is not made on the civil money penalty, additional interest shall 
accrue pursuant to 31 U.S.C. §3717.   
 
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
  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. 

 4 
 
(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 
Omega 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. 
 
  

 5 
C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action ("Penalty Offset").  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a "Related Investor Action" means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 
 
 
 
 
 
 By the Commission. 
 
 
 
       Brent J. Fields 
       Secretary 
 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 76142 / October 14, 2015 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-16896 

 

 

In the Matter of 

 

OMEGA ADVISORS, INC. 

 

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 Omega Advisors, Inc. (“Omega” 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 a violation of Rule 105 of Regulation M of the 

Exchange Act by Omega, a New York-based registered investment adviser.  Rule 105 prohibits 

selling short an equity security that is the subject of certain public offerings and purchasing the 

offered security from an underwriter or broker or dealer participating in the offering, if such short 

sale was effected during the restricted period as defined therein. 

 

 2. On January 15, 2015, Omega bought offering shares from an underwriter or broker 

or dealer participating in a follow-on public offering after having sold short the same security 

during the Rule 105 restricted period.  The violation resulted in profits of $68,340.  

 

Respondent 

 

 3. Omega Advisors, Inc. is a corporation incorporated in Delaware with its principal 

place of business in New York, New York.  Omega Advisors, Inc. has been registered with the 

Commission as an investment adviser since March 1993.  The firm provides advisory services to 

three domestic funds and four foreign funds and has total assets under management in excess of 

$9 billion. 

 

Legal Framework 

 

4. Rule 105 makes it unlawful for a person to purchase equity securities in certain 

public offerings from an underwriter, broker, or dealer participating in the 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 Form 1-A or Form 1-E and ending with the 

pricing.  17 C.F.R. § 242.105(a)(1) and (a)(2).     

 

5. 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. 

 

 

                                                 
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 

Omega’s Violation of Rule 105 of Regulation M 

 

 6.   On January 12, 2015, Omega sold short 150,000 shares of Southwestern Energy 

Co. (“SWN”) during the restricted period at a price of $23.6834 per share.  On January 15, 2015, 

SWN announced the pricing of a follow-on offering of its common stock at $23.00 per share.  

Omega received an allocation of 100,000 shares in that offering.  Thus, Omega’s participation in 

the SWN offering resulted in total profits of $68,340.   

 

  7. In total, Omega’s violation of Rule 105 resulted in profits of $68,340. 

 

Violation 

 

 8. As a result of the conduct described above, Omega violated Rule 105 of Regulation 

M under the Exchange Act.  

 

Omega’s Remedial Efforts & Cooperation 

9. 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 Omega’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

 

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

from committing or causing any violations and any future violations of Rule 105 of Regulation M of 

the Exchange Act;   

 

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

of $68,340, prejudgment interest of $686.58, and a civil money penalty in the amount of $65,000 

(for a total of $134,026.58) to the Securities and Exchange Commission for transfer to the general 

fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely payment 

is not made on the disgorgement amount, additional interest shall accrue pursuant to SEC Rule of 

Practice 600.  If timely payment is not made on the civil money penalty, additional interest shall 

accrue pursuant to 31 U.S.C. §3717.   

 

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  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. 



 4 

 

(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 

Omega 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. 

 

  



 5 

C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action ("Penalty Offset").  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a "Related Investor Action" means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 

 

 

 

 

 

 By the Commission. 

 

 

 

       Brent J. Fields 

       Secretary