Reuters – The U.S. Securities and Exchange Commission sued hedge fund manager John Mangan on Thursday for insider trading five years ago, prompting him to say the charges were unfounded and he wouldbe cleared.<\/p>\n
The lawsuit accuses Mangan of receiving $87,069 of ill-gotten profits from trading in shares of CompuDyne Corp. in 2001. It is seeking the return of those profits with interest, plus additional penalties.<\/p>\n
According to the agency, Mangan in 2001 wore two hats that allowed him to trade on inside information: He was a salesman at brokerage Friedman, Billings, Ramsey & Co., and a partner in a hedge fund with Hugh McColl III, a son of the former chief executive at Bank of America Corp.<\/p>\n
The SEC said Mangan found out about an upcoming private sale of CompuDyne shares through his job at FBR, and loaned McColl money to buy shares, with an understanding that Mangan would collect half the profits.<\/p>\n
It said McColl’s fund also sold shares short prior to the public announcement of the stock sale, and profited when the share price fell. The SEC filed its lawsuit with the U.S. District Court in the Western District of North Carolina.<\/p>\n
Mangan said in a statement that based on a conversation with an officer at FBR, he believed the private deal had already been announced when he asked his fund to sell shares short.<\/p>\n