Perry Capital Fined by SEC for Mylan Holding

July 27th, 2009
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The SEC charged New York-based hedge fund, Perry Capital last week for failing to meet SEC reporting obligations. The Securities Act requires institutional investors to report ownership of more than 5% of the common stock in a publicly traded company. According to the SEC press release, Perry Capital had acquired almost 10% of common stock in Mylan Laboratories, Inc. (NYSE: MYL) in order to vote on a proposed merger that required shareholder approval and failed to report it. Perry Capital was arbitraging stocks in the proposed merger between Mylan Laboratories and King Pharmaceuticals so it separately purchased voting shares in Mylan to increase the likelihood of the deal.

According to the SEC order, Perry Capital allegedly concluded that the acquisition was “in the ordinary course of its business” and thus was not obligated to report it. But the SEC only allows certain “qualified institutions” to defer reporting obligations if acquisitions are made as part of passive investment activities not when acquisitions are made with the intent of affecting management decisions or influencing the outcome of a transaction such as voting in a proposed merger.

Perry Capital agreed to pay $150,000 in penalties to settle the SEC charge without admitting or denying the Commission’s findings. In addition, the SEC censured Perry and ordered it to cease and desist anything that is in violation of section 13(d) of the Exchange Act.

Perry Capital was founded in 1988 by CEO Richard Perry and Chief Investment Officer Paul Leff. Prior to founding the firm, Mr. Perry was in the equity trading division of Goldman Sachs, while Mr. Leff was a principal at Harvard Management. For more information on this hedge fund, please see its “Detailed Investor Profile” below.
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For Detailed Investor Profiles on these Investors, click below:
Perry Capital
Related People: Paul Leff; Richard Perry
Related Entities: Perry Corp.; Perry Partners
Related Article Tags: Hedge Fund Fraud and Ponzi Scheme News


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