SEC Obtains Final Judgment Against Hedge Fund Adviser, Gregory Lemelson, and Lemelson Capital Management, Who Jury Found Liable for Securities Fraud
Securities and Exchange Commission v. Gregory Lemelson, Lemelson Capital Management, LLC, and The Amvona Fund, No. 18-civ-11926 (D. Mass., filed September 12, 2018)
(STL.News) The Securities and Exchange Commission (SEC) obtained a final judgment on March 30, 2022, against a hedge fund adviser and his investment advisory firm.
According to the SEC’s complaint, filed in September 2018, Gregory Lemelson and Massachusetts-based Lemelson Capital Management, LLC (“LCM”) were charged with making false statements to drive down the price of San Diego-based Ligand Pharmaceuticals Inc. and profit from a short position in Ligand’s stock.
The final judgment entered by the U.S. District Court for the District of Massachusetts enjoins Lemelson and LCM from violating the anti-fraud provisions of Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder for a period of five years. The final judgment further orders Lemelson to pay a third-tier civil penalty in the amount of $160,000.
On November 5, 2021, a jury found Lemelson and LCM liable for making three false and misleading statements about Ligand. The jury did not find the defendants liable on certain other charges and allegations. The false statements Lemelson and LCM were found liable for include assertions that Ligand’s investor relations firm had agreed that Ligand’s most profitable drug was “going away” and that Ligand had entered into a sham transaction with an unaudited shell company in order to pad its balance sheet. The evidence also showed that Lemelson had boasted about bringing down Ligand’s stock price through his “multi-month battle” against the company.
The SEC’s litigation was conducted by Marc J. Jones and Alfred A. Day of the Boston Regional Office. The SEC’s investigation was conducted by Virginia Rosado Desilets, Sonia Torrico, and Jennifer Clark, and supervised by David A. Becker and Carolyn Welshhans.