SEC charges 2 with insider trading of Herbalife

AP News
|
Posted: Sep 30, 2014 6:30 PM

NEW YORK (AP) — The Securities and Exchange Commission said Tuesday that it charged two men with insider trading after they learned that hedge fund manager Bill Ackman was betting against Herbalife Ltd.'s stock.

The SEC said Filip Szymik, 28, was told by his roommate, then an analyst at Ackman's hedge fund, Pershing Square Capital Management, that Ackman was going to announce a negative view of Herbalife Ltd. The roommate was not named by the SEC because he is not accused of wrongdoing.

The SEC said that Szymik then told another friend, 30-year-old Jordan Peixoto, that Ackman was going to announce a negative view of Herbalife.

Ackman has bet heavily against the weight loss and nutritional company and described it as a pyramid scheme. He is not accused of any wrongdoing by the SEC in this case. His New York-based hedge fund, Pershing Square, declined to comment on Tuesday.

Peixoto bet against Herbalife stock using put options a day before Ackman presented his case against Herbalife in December 2012, earning Peixoto $47,100 as Herbalife's stock dropped, the SEC said.

The SEC settled with Szymik, who did not make any Herbalife trades. He will pay a $47,100 penalty. In settling, Szymik did not admit any wrongdoing.

"Szymik did not trade a single share of Herbalife or make a penny from his friend's trade," Szymik's lawyer Paul Ryan, of law firm Serpe Ryan, said. "With this settlement, he hopes to put this behind him."

Peixoto's lawyer, Derrelle Janey of Gottlieb & Gordon, said Peixoto will fight the allegations.

"This is another instance of the SEC going too far and penalizing conduct that is not a violation of the law," Janey said.