UPDATE 1-Canadian sues SEC to stop Herbalife insider trading case
(Adds details from complaint, background on similar claims, case citation, byline)
By Jonathan Stempel
NEW YORK Oct 20 (Reuters) - A Toronto man accused by the U.S. Securities and Exchange Commission of insider trading in Herbalife Ltd on Monday sued the federal regulator to stop it from pursuing its case.
In a complaint filed in Manhattan federal court, Jordan Peixoto said the SEC "intentionally and strategically" singled him out by pursuing an administrative proceeding to force a settlement, rather than sue him in federal court.
He also said the SEC case violates the U.S. Constitution because of how administrative law judges are appointed.
"The administrative process is a star chamber where only the Commission emerges as the victor and the defendant is defenseless," said Peixoto, who seeks a permanent injunction against the SEC. He also denied wrongdoing.
SEC spokesman John Nester declined to comment.
In a Sept. 30 complaint, the SEC alleged that Peixoto made $47,100 in December 2012 by trading illegally in Herbalife put options, after his friend Filip Szymik shared news that hedge fund manager William Ackman was about to reveal a big, bearish bet against the diet supplement company.
Szymik had allegedly learned of the $1 billion bet from his roommate, an analyst at Ackman's Pershing Square Capital Management LP. Peixoto was at the time an analyst at the accounting firm Deloitte & Touche. Continued...