The SEC already penalized Steven Hart for violating securities laws by conducting insider trading and match trading
Steven Hart, portfolio manager of Octagon Capital was charged with obstruction of justice (agency proceeding) and perjury by the United States Attorney for the Southern District of New York.
The U.S. Attorney filed the lawsuit after the SEC found that the defendant committed fraudulent trading schemes after completing its investigation in 2012.
Details of U.S. Attorney’s allegations
At the time, the SEC was investigating the practices of Steven Hart in his capacity as portfolio manager of Octagon Capital whether he conducted non-arms-length “match trades” or “cross trades” between his personal fund, Octagon, and the fund.
The commission was also investigating whether Steven Hart caused Octagon to purchase certain securities on the open market and caused the fund to purchase those securities from Octagon at inflated, above-market prices to gain profit.
The SEC was also investigating whether Steven Hart traded securities based on material non-public information relating to confidentially-marketed securities offering that he obtained while being solicited to invest in those offerings.
During the investigation, the SEC sent document subpoena’s to Octagon Capital on multiple occasions to speak to its president. The commission also took sworn testimonies related to its investigation from several individuals including Steven Hart.
Steven Hart’s efforts to obstruct justice, commit perjury
The U.S. Attorney alleged that that Steven Hart tried to obstruct justice by producing documents in response to the SEC subpoena to prevent his employer and direct supervisor from learning about the investigation.
Steven Hart also submitted a sworn statement indicating that the president of the investment firm is aware of the investigation, discussed and approved his match trading activity.
The U.S. Attorney emphasized that the defendant lied in his sworn statement because the investment firm’s president never approved his match trades, and is not aware of and did not discuss the SEC investigation.
The U.S. Attorney also alleged that Steven Hart impersonated his employer and direct supervisor during phone calls with the SEC.
According to the U.S. Attorney, Steven Hart “corruptly influenced, obstructed and impeded, and endeavored to influence, obstruct and impede the due and proper administration of the law under which a pending proceeding was being had before a department and agency of the United States…”
The U.S. Attorney also charged Steven Hart of perjury for providing false testimony to the SEC and all the other allegations mentioned above.
SEC final judgment against Steven Hart on 2012
On December 2012, the SEC found that Steven Hart committed fraudulent trading schemes—match trading and insider trading ahead of certain confidentially marketed offerings.
He violated Section 17 (a) of the Securities Act of 1933 and Section 10 (b) of the Securities Exchange Act of 1934 and Rule 10b-5, as well as Sections 206(1) and 206(2) of the Advisers Act.
The SEC ordered Steven Hart to pay $831,071 in disgorgement plus pre-judgment interest in the amount of $103,424 and $394,733 in civil penalty under its final judgment.