The Securities and Exchange Commission has charged Robert Berlacher, a Philadelphia hedge fund manager, with raising more than $1.7 million in illegal profits on insider trading and improper short sales of companies that were conducting private capital raising deals.
Berlacher increased his compensation and the fund’s performance by conducting at least 10 private investments in public equity, or PIPE, deals, the SEC said. Berlacher, 53, obtained easy and illegal profits by engaging in short sales of companies by using PIPE deals and later covering the short positions with shares obtained in the PIPE deal, the SEC said.
The activity took place during 2000 to early 2005. To avoid detection, Berlacher and his firm employed a variety of deceptive trading techniques, including wash sales, matched orders and pre-arranged trades to make it seem that they were covering their short sales with open market shares. However, Berlacher was on both sides of the transactions.
The SEC lawsuit also names hedge funds Insignia Partners, Lancaster Investment Partners, Northwood Capital Partners, Cabernet Partners, Chardonnay Partners, VFT Special Ventures, IP Advisors, and advisory firms NCP Advisors and RAB Investment Co., in the suit.
The SEC is seeking to fine Berlacher and his firm, and force them to return their allegedly ill-gotten gains.