Seven months ago, HFMA published Millions in Defense but Not One Penny for Tribute, an article inspired by Leon Cooperman’s SEC insider trading indictment. Recently, Mr. Cooperman forked over $4.95 million to settle the case. Cooperman was not asked to acknowledge any wrongdoing, nor was he subject to any industry ban, which is common in such cases.

In the best traditions of the Black Hand, the Cosa Nostra, the Mafia, the Yakuza, the Triad and the Purple Gang, the SEC succeeded in extracting $4.95 million dollars from Leon Cooperman, a man whose guilt was never proven, acknowledged or tested in a court of law.

In addition to the almost $5 million fine paid by Cooperman, his firm, Omega Advisors, lost some $1.8 billion in assets under management (AUM) after the indictment was announced, which represents potential lost fee income of around $3.6 million. Furthermore, there is no formula to quantify the value of a man’s reputation—a reputation arguably tarnished by this indictment.

Why Did He Pay?

There are two possibilities. One is that Mr. Cooperman and/or his firm may indeed be guilty of these charges. If so, proceeding to trial would likely result in a guilty verdict.

Two, even though Mr. Cooperman and/or his firm may be innocent of the charge, it is fiscally irresponsible to contest the case. Not only would protracted legal proceedings be costly, the continued erosion of assets under management would be extremely detrimental to the firm.

The singular fact in this perplexing scenario is that only Leon Cooperman knows whether he is guilty or innocent and, given the complexity and convoluted nature of the laws and regulations in play, Cooperman may not view himself as innocent with any degree of certainty.

After all, who could fault him? The average American commits three Federal criminal felonies per day, according to Harvey A. Silverglate, author of the book Three Felonies a Day. Incidentally, this number would skyrocket if state and local laws were part of the equation.

Let’s Be Frank

Regardless of how one views Cooperman’s decision to settle this case; it was his decision. This is the path Cooperman chose, despite the statement he made in the course of his Squawk Box interview, “We could have settled this matter with the SEC for an amount that is far less than I donate to charity every year, but I refused to do so because I know that we acted appropriately and lawfully.”

What Happened to Justice?

One will never know Cooperman’s guilt or innocence. All anyone can really know is that a sum of money was paid to halt a proceeding. Cooperman acknowledged no wrongdoing, yet he paid almost $5 million for the privilege of being allowed to go about his business.

Many have argued that those with money to fight the system will prevail, but this is dependent upon how much wealth a given individual is willing to sacrifice. Cooperman, with a net worth of $3 billion may have decided that the monetary cost to prevail was too high, especially when confronting an adversary willing to spend whatever amount of taxpayer money is necessary to achieve its desired outcome.

It does lead one to wonder – when and how can the system be shifted toward justice?

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