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The Securities and Exchange Commission is seeking to dismiss its complaint against Silver Point Capital, a credit hedge fund it accused in December of lax controls around protocols for non-public information.
The final dismissal will depend on a vote by the regulator’s commissioners, and Silver Point has agreed to drop potential claims against the SEC as a condition of the settlement.
The SEC said in its complaint that Chaim Fortgang, who was a Silver Point consultant and a famed bankruptcy lawyer, had been improperly exempt from the firm’s strict controls imposed on employees whose work touched both its “public” arm that traded securities and its “private” side that entered into confidential negotiations on debt restructurings.
Fortgang, who rose to prominence at the law firm Wachtell Lipton in the 1980s and 1990s, joined Silver Point as a consultant in 2004. He died in 2021 at age 74.
Silver Point claimed Fortgang was acting as the firm’s legal counsel and not an investor, and was exempt from typical compliance requirements, according to a filing in federal court in February.
The firm on Thursday said: “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 declined to comment.
Silver Point was founded by former Goldman Sachs executives in the early 2000s and is one of the most prominent players in distressed debt markets. Treatment of confidential information in bankruptcy and restructuring cases became a focus for the SEC during former president Joe Biden’s term, with the agency bringing enforcement actions against multiple prominent credit funds.
