FROM: SECURITIES AND EXCHANGE COMMISSION
SEC Obtains an Officer and Director Bar and Over $1.5 Million in Disgorgement and Penalties from Chicago Area Investment Adviser and Its Owner for Fraud
The United States Securities and Exchange Commission (Commission) announced today that on July 14, 2014, Judge Charles P. Kocoras of the United States District Court for the Northern District of Illinois entered a judgment imposing $715,700 in disgorgement plus prejudgment interest of $166,476 against Oakbrook, Illinois resident Patrick G. Rooney (Rooney) and his company Solaris Management, LLC (Solaris) and a $715,700 civil penalty against Rooney. Judge Kocoras also barred Rooney from operating a private investment fund and from serving as an officer or director of any public company, expect for Positron Corporation (Positron), for which Rooney currently serves as Chief Executive Officer and Chairman of the Board.
According to the SEC's complaint filed on November 16, 2011, Rooney and Solaris radically changed the investment strategy of the Solaris Opportunity Fund LP (the Fund), contrary to the Fund's offering documents and marketing materials, by becoming wholly invested in Positron, a financially troubled microcap company. The SEC alleges that Rooney, who has been Chairman of Positron since 2004 and received salary and stock options from Positron since September 2005, misused the Fund's money by investing more than $3.6 million in Positron through both private transactions and market purchases. Many of the private transactions were undocumented while other investments were interest-free loans to Positron. Rooney and Solaris hid the Positron investments and Rooney's relationship with the company from the Fund's investors for over four years. Although Rooney finally told investors about the Positron investments in a March 2009 newsletter, the SEC's complaint alleges he falsely told them he became Chairman to safeguard the Fund's investments. These investments benefited Positron and Rooney while providing the Fund with a concentrated, undiversified, and illiquid position in a cash-poor company with a lengthy track record of losses.
On December 19, 2013, Judge Kocoras entered an order of permanent injunctions enjoining Rooney and Solaris Management from violating Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rules 206(4)-8(a)(1) and (a)(2) thereunder; Section 17(a) of the Securities Act of 1933; and Sections 10(b) and 13(d)(1) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13d-1 thereunder.
For additional information see Litigation Releases Number 22895 (Dec. 23, 2013) and 22167 (Nov. 22, 2011) and Press Release Number 2011-252 (Dec. 1, 2011).