
The U. S. Securities and Exchange Commission expects to drop its case against Connecticut-based hedge fund Silver Point Capital, L.P., for failing to have written policies and procedures in place requiring the chaperoning of conversations between Chaim Fortgang, a legal consultant, and the firm's investment professionals.
The SEC and Silver Point filed a joint motion for a stay Thursday in the case before the U.S. District Court for the District of Connecticut to allow the Commission to approve the parties' "agreement in principle" to dismiss the case with prejudice.
The agreement also provided for Silver Point's waivers and releases and the commission's formal approval.
"Silver Point Capital is pleased that the enforcement staff of the SEC has agreed, subject to commission approval, to dismiss its lawsuit against the firm with prejudice," Silver Point said in public statement. "There was absolutely no basis in the evidence or the law for the claims asserted by the SEC, and the SEC should never have filed this action in December 2024."
The SEC said Silver Point
Fortgang, who has since died, represented Silver Point in negotiations related to Puerto Rico's debt restructuring in 2019 and 2020.
Silver Point netted a profit of $29 million from the Puerto Rico bonds it bought in late 2019 and early 2020, the SEC said.
Since Fortgang was an experienced and respected attorney and only gave legal advice to members of the firm, neither he nor the firm did anything wrong, Silver Point said.
"Silver Point seeks to always operate with the highest ethical standards and to maintain best-in-class compliance policies and procedures," Silver Point said in a statement. "We are focused on moving forward and maintaining a positive, productive and collaborative relationship with the SEC that we have worked to establish since the firm's inception."
An SEC spokesman declined to comment beyond the joint filing for a stay.
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