2014-09-16 SEC Press pdf 89 KB 8,285 chars

In re GREAT POINT

Exhibit of SEC Sanctions 19 Firms and Individual Trader for Short Selling Violations in Advance of Stock Offerings

summary

Great Point Partners, LLC (GPP) violated Rule 105 of Regulation M by short-selling Anacor Pharmaceuticals shares during the restricted period and purchasing shares in a follow-on offering, generating $43,068 in illicit profits.

paragraph

GPP, a Connecticut-based investment firm with over $935 million in assets under management, sold short 15,000 shares of Anacor Pharmaceuticals during the restricted period and then purchased 75,000 shares in a follow-on offering, resulting in $43,068 in illicit profits. The SEC found that GPP's actions violated Rule 105 of Regulation M, which prohibits such conduct. GPP agreed to a cease-and-desist order, disgorging $43,068 in profits, paying $1,529.13 in prejudgment interest, and a $65,000 civil penalty.

narrative

Great Point Partners, LLC (GPP), a Delaware limited liability company based in Greenwich, Connecticut, and registered with the SEC since March 2012, provides advisory services to domestic and foreign funds with total assets under management exceeding $935 million. In April 2013, GPP sold short 15,000 shares of Anacor Pharmaceuticals, Inc. (ANAC) during the restricted period before a follow-on offering and subsequently purchased 75,000 shares in that offering. This transaction generated $43,068 in illicit profits, comprising $14,754 from the short-sale-to-offering price spread and $28,314 from the discounted price of the remaining shares. The SEC accepted GPP's settlement offer, citing its prompt remedial actions and cooperation with staff. GPP consented to a cease-and-desist order without admitting or denying the findings and agreed to pay a total of $109,597.13, including disgorgement, prejudgment interest, and a civil penalty. The SEC's action was based on GPP's violation of Rule 105 of Regulation M, a prophylactic rule aimed at preventing manipulative activities around public offerings.

Enriched metadata

Scheme: market-manipulation (100%)
Outcome: settled
Disgorgement: $43,068
Civil penalty: $109,597

Classified market-manipulation(confidence 100%). EDGAR detection: forms SC 13D/G/13F· recall 53% / precision 9%. detection rule →

Extracted insights

Dollar amounts 8

$935.00M $935 million $100M–$1B
$1.00M $1,000,000 $1M–$10M
$110K $109,597 $100K–$1M
$65K $65,000 $10K–$100K
$43K $43,068 $10K–$100K
$28K $28,314 $10K–$100K
$15K $14,754 $10K–$100K
$2K $1,529 <$10K

Entities 5

company cease-and-desist proceedings against great point partners, llc
location delaware
company great point partners, llc
agency sec since march 2012
agency Securities and Exchange Commission

Triples 10

SEC instituted cease-and-desist proceedings against Great Point Partners, LLC
Great Point Partners, LLC violated Rule 105 of Regulation M
Great Point Partners, LLC sold short equity security during Rule 105 restricted period
Great Point Partners, LLC bought offering shares from underwriter in April 2013
Great Point Partners, LLC generated $43,068 in profits from violation
Great Point Partners, LLC incorporated in Delaware
Great Point Partners, LLC based in Greenwich, Connecticut
Great Point Partners, LLC registered with SEC since March 2012
Great Point Partners, LLC manages assets in excess of $935 million
Great Point Partners, LLC provides advisory services to two foreign funds and nine domestic funds

PDF

In re GREAT POINT · Source

Text layers

Extracted body text (8,285c)

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 73120 / September 16, 2014

ADMINISTRATIVE PROCEEDING
File No. 3-16124

In the Matter of

GREAT POINT
PARTNERS, LLC

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

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 Great Point Partners, LLC. (“GPP” 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.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds
1
that:

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.

Summary

1. These proceedings arise out of a violation of Rule 105 of Regulation M of the
Exchange Act by GPP, a Connecticut-based investment firm. 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. In April 2013, GPP 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. This violation resulted in profits of $43,068.

Respondent

3. Great Point Partners, LLC is a limited liability company incorporated in Delaware
with its principal place of business in Greenwich, Connecticut. Great Point Partners, LLC has
been registered with the SEC since March 2012 and provides advisory services to two foreign
funds and nine domestic funds. Great Point Partners, LLC has total assets under management in
excess of $935 million.

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.

GPP’s Violation of Rule 105 of Regulation M

6. On April 19, 2013, GPP sold short 15,000 shares of Anacor Pharmaceuticals, Inc.
(“ANAC”) during the restricted period at a price of $7.3736 per share. On April 26, 2013, ANAC
announced the pricing of a follow-on offering of its common stock at $6.39 per share. GPP
received an allocation of 75,000 shares in that offering. The difference between GPP’s proceeds
received from the restricted period short sales of ANAC shares and the price paid for the 15,000

3
shares received in the offering was $14,754. Respondent also improperly obtained a benefit of
$28,314 by purchasing the remaining 60,000 shares at a discount from ANAC’s market price.
Thus, GPP ’s participation in the ANAC offering resulted in total profits of $43,068.

7. In total, GPP ’s violation of Rule 105 resulted in profits of $43,068.

Violation

8. As a result of the conduct described above, GPP violated Rule 105 of Regulation M
under the Exchange Act.

GPP’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 GPP’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, Respondent GPP cease and desist
from committing or causing any violations and any future violations of Rule 105 of Regulation M of
the Exchange Act;

B. GPP shall within fourteen (14) days of the entry of this Order, pay disgorgement of
$43,068, prejudgment interest of $1,529.13, and a civil money penalty in the amount of $65,000
(for a total of $109,597.13) to the United States Treasury. 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) 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

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
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 GPP
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.

By the Commission.

Jill M. Peterson
Assistant Secretary

OCR text (7,701c · tika · 95% conf)

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 73120 / September 16, 2014

ADMINISTRATIVE PROCEEDING
File No. 3-16124

In the Matter of

GREAT POINT
PARTNERS, LLC

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

II.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds1 that:

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.

Summary

1. These proceedings arise out of a violation of Rule 105 of Regulation M of the

Exchange Act by GPP, a Connecticut-based investment firm. 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.

Respondent

Legal Framework

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.

GPP’s Violation of Rule 105 of Regulation M

shares received in the offering was $14,754. Respondent also improperly obtained a benefit of
$28,314 by purchasing the remaining 60,000 shares at a discount from ANAC’s market price.
Thus, GPP ’s participation in the ANAC offering resulted in total profits of $43,068.

7. In total, GPP ’s violation of Rule 105 resulted in profits of $43,068.

Violation

8. As a result of the conduct described above, GPP violated Rule 105 of Regulation M
under the Exchange Act.

GPP’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 GPP’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, Respondent GPP cease and desist
from committing or causing any violations and any future violations of Rule 105 of Regulation M of
the Exchange Act;

(1) Respondent may transmit payment electronically to the Commission, which will
provide detailed ACH transfer/Fedwire instructions upon request;2

(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

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.

HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

By the Commission.

Jill M. Peterson
Assistant Secretary