[ by Howard Haykin ] Wesley Capital Management, LLC, the Respondent, submitted an Offer of Settlement which the SEC agreed to accept.  The SEC had charged Wesley Capital with violating Rule 105 of Regulation M of the Exchange Act. Wesley was at all relevant times the investment adviser to multiple hedge funds and one managed account. On two occasions in April 2009, Wesley violated Rule 105 of Regulation M by purchasing securities in public offerings by Duke Realty Corporation ("Duke") and Host Hotels & Resorts, Inc. ("Host") after having sold short the securities of both of these issuers during the five business days prior to the pricing of the public offerings. By participating in these offerings, Wesley realized profits of $142,124. About The Respondent. Wesley is a Delaware limited liability company located in New York, New York.  It's been registered with the SEC as an Investment Adviser since 3/30/09 and managed about $253 million in investor assets as of 1/31/12. Other Entities. Duke is a publicly traded REIT based in Indianapolis.  Duke shares are listed on the NYSE.  Host is a publicly traded REIT based in Bethesda, MD.  Its shares are also listed on the NYSE. Respondent’s Violations of Regulation M. Rule 105 of Regulation M of the Exchange Act provides, in pertinent part:

In connection with an offering of equity securities for cash pursuant to a registration statement. . . filed under the Securities Act of 1933 ("offered securities"), it shall be unlawful for any person to sell short . . . the security that is the subject of the offering and purchase the offered securities from an underwriter or broker or dealer participating in the offering if such short sale was effected during the period ("Rule 105 restricted period") that is the shorter of the period:  (1) Beginning 5 business days before the pricing of the offered securities; or (2) Beginning with the initial filing of such registration statement . . . and ending with the pricing. 17 C.F.R. § 242.105(a)(1) and (a)(2) (effective October 9, 2007).

On Thursday, 4/9/09, and on Wednesday, 4/15/09, 5 of the funds advised by Wesley sold short a total of 460,000 shares of Duke stock at prices ranging from $7.59 to $8.22 per share. On Wednesday, April 15, 2009, Duke stock closed at $8.44.  On Thursday, April 16, 2009, before the trading markets opened, Duke priced a follow-on offering of its stock at $7.65 per share.  The registered shares were offered to the public through a group of underwriters on a firm-commitment basis.  Accordingly, the Rule 105 restricted period ran from Thursday, April 9, 2009 through Wednesday, April 15, 2009. On Thursday, April 16, 2009, the same 5 funds advised by Wesley that had sold Duke short, purchased 225,000 shares in the follow-on offering at $7.65 per share.  Wesley  therefore realized an unlawful profit of $82,027 by participating in the Duke offering after having shorted Duke stock during the Rule 105 restricted period. On Thursday, April 23, 2009, 5 of the funds advised by Wesley sold short a total of 950,000 shares of Host stock at prices ranging from $6.98 to $7.55 per share. On Thursday, April 23, 2009, Host stock closed at $7.10 per share.  On Friday, April 24, 2009, before the trading markets opened, Host priced a follow-on offering of its stock at $6.60 per share.  The registered shares were offered to the public through a group of underwriters on a firm-commitment basis.  Accordingly, the Rule 105 restricted period ran from Friday, April 17, 2009, through Thursday, April 23, 2009. On Friday, April 24, 2009, the same five funds advised by Wesley that had sold Host short, purchased 125,000 shares in the follow-on offering at $6.60 per share.  Wesley therefore realized an unlawful profit of $60,097 by participating in the Host offering after having shorted Host stock during the Rule 105 period. After the conduct described above, Wesley developed and implemented policies and procedures pertaining to compliance with Rule 105 of Regulation M. Violations and Sanctions. As a result of the conduct described above, Wesley willfully committed violations of Rule 105 of Regulation M.  For these violations, Wesley agrees to cease and desist from committing or causing any violations and any future violations of Rule 105 of Regulation M of the Exchange Act. Wesley shall within 20 days of this Order, pay disgorgement of $142,124, prejudgment interest of $15,165, and a civil penalty of $75,000. For further details, go to:  [SEC Admin Proceeding 3-14962, 7/26/12].