Omega Advisors, Inc.

810 Seventh Avenue |

33rd

Floor

11431 W. Palmetto Park Road

New York, New York 10019

Boca Raton, Florida 33428

Tel: 212-495-5200 | Fax: 212-495-5236

Tel: 561-852-2565

Leon G. Cooperman, CFA

Chairman & Chief Executive Officer

September 21, 2016

Dear Fellow Investor:
As you may recall, we informed you in March of last year that Omega Advisors, Inc. (Omega) had received
subpoenas from the U.S. Attorneys Office for the District of New Jersey (the U.S. Attorneys Office) and the
U.S. Securities and Exchange Commission (the Commission). Earlier this year, we informed you that Omega
and I had received a Wells Notice from the staff of the Commission pertaining to the same subpoena we
received from the Commission last March. We responded to the Wells Notice in writing and met with the
Commission staff to explain why charges against either Omega or me would be totally unwarranted. Despite
what we believe to be complete factual and legal defenses, the Commission has filed a formal complaint
against both Omega and me, alleging violations of the federal securities laws. Separately, we have been
advised by the U.S. Attorneys Office that it has not completed its investigation but has determined not to
pursue charges for the time being pending the U.S. Supreme Courts decision in Salman v. United States.
Needless to say, we are highly disappointed with the Commissions decision to file charges, and we strongly
disagree with the Commission that either the firm or I have engaged in any unlawful conduct.
The Commissions complaint concerns trading in securities issued by a company called Atlas Pipeline Partners,
L.P. (Atlas Pipeline or APL), an oil and gas company. Specifically, the Commission has alleged that Omega
and I traded in Atlas Pipeline stock, bonds and call options in July 2010 after supposedly learning from a
company insider shortly beforehand that the company was planning to sell one of its plants (Elk City) at the
end of that month. The Commission has also alleged that the companys stock price rose approximately 30%
following the public announcement of the sale on July 28, 2010. According to the Commissions complaint,
trading in Atlas Pipeline in advance of that announcement resulted in a gain of approximately $4 million
based on the increase in Atlas Pipelines stock and bond prices following the announcement.
We have done nothing improper and categorically deny the Commissions allegations. As I wrote last year
when we first received the subpoenas, I have throughout my fifty-year career in the securities business firmly
believed in detailed, fundamental research. As I explained then, that approach has long contemplated direct,
face-to-face interactions with company management. Such exchanges of information with company
management are appropriate, well-established in the industry, and even necessary. As a Wall Street Journal
op-ed put it just last year, information is not a crime. Although we dont think it would be productive to
state here our views on what we believe to be a seriously misguided effort by the authorities in these
matters, we would refer anyone who is interested to Three Felonies a Day: How the Feds Target the Innocent
by Harvey A. Silverglate and Licensed to Lie: Exposing Corruption in the Department of Justice by Sidney
Powell, both of which provide fascinating insights into the machinations of our countrys criminal justice
system.
While we cannot discuss all the specifics of these matters as they are ongoing, we believe it is important for
us to provide you with some basic facts concerning the Commissions charges.

As noted, the Commissions charges relate to a single company, Atlas Pipeline, and concern trading during a
three-week period more than six years ago. Atlas Pipeline was one of several companies controlled by the
Cohen family, a number of whose members I had known for many years. Omega first invested in the
company in June 2007 more than three years before the events at issue in the Commissions complaint
through a Private Investment in Public Equity (PIPE) transaction. (We had been investors in Atlas-related
companies since 2002.) At that time, we acquired more than 1.9 million shares for about $44 per share, or
more than $80 million worth of APL shares. We invested in the company based on the fundamental research,
detailed analysis, and recommendation of a former Omega investment analyst who left the firm several years
ago.
We significantly increased the firms position in Atlas Pipeline over the course of the next several years, based
on the continued fundamental research, detailed analysis, and recommendation of the same investment
analyst, adding more than two million additional shares from 2007 through 2009, at prices ranging from a
high of about $43 to a low of around $5.10 per share. Indeed, even as the companys stock price fell
significantly during that time period, Omega held and continued adding to its holdings, reflecting our
confidence in the companys long-term value, our belief that the stock was undervalued, and the
encouragement we consistently took from APL managements public insistence, and the Streets belief, that
the company would fix its liquidity problems. In fact, by July 2010 the time period that is the focus of the
Commissions charges Omega had established a position in the company of more than four million shares,
at a cost of more than $150 million.
Significantly, the stock purchases by Omega cited in the Commissions complaint were made for only two
managed accounts one of which was new to the firm at the time that were underweighted in Atlas
Pipeline stock compared with Omegas other managed accounts. Specifically, prior to the July 13 purchases,
these two accounts had 0.9% and 0.0%, respectively, of their net asset values invested in APL stock. By
contrast, the other seven accounts managed by Omega at that time had between 1.4% and 1.6% of their
respective net asset values invested in APL stock. As a general matter, to the extent that multiple accounts
have substantially the same investment mandate, we try to manage them pari passu, subject to capital
availability, market prices and similar factors.
Omega did not purchase Atlas Pipeline shares in July 2010 for any of the Omega funds in which I had my own
capital invested. Moreover, the shares that were purchased for two of the firms clients in July 2010
represented an insignificant investment for Omega. Specifically, from July 13, 2010 until July 19, 2010,
Omega purchased a total of 343,600 APL shares for these two clients, at an average price of less than $11 per
share, for a total investment of $3.8 million. Omegas $3.8 million investment in Atlas Pipeline in July 2010
represented less than 0.08% of Omegas assets under management at the time. In addition, Omega already
had purchased approximately $152 million in APL stock prior to July 2010, so the additional investment of
$3.8 million represented only a 2.5% increase in Omegas cumulative investment in Atlas Pipeline at the time.
Critically, following the announcement on July 28, 2010 that Atlas Pipeline had sold the plant at issue, Omega
sold no shares in the company. In fact, Omega sold absolutely no APL shares for more than one year after the
announcement. Instead, we continued to build our position, buying more than 100,000 additional shares of
the companys stock in August and September 2010, resulting in holdings of more than four million shares.
When we finally did sell some stock, we sold only 6,100 shares in August 2011, and maintained a net long
position even as the stock price fell into the single digits until we sold out of our position just last year.
The Commissions allegations are also based on stock trades in my personal and deferred compensation
accounts, and on bond and options trades in those accounts and by Omega, but we have complete defenses
to those allegations, too.

The allegations concerning my deferred compensation account relate to trades made with a portion of the
assets comprising my deferred compensation from Omega Overseas Partners Ltd. (my Deferred
Compensation Account). Like the accounts Omega managed, the Deferred Compensation Account owned
Atlas Pipeline stock for years prior to 2010, as I and various family members had personally since July 2007.
As of July 2010, the Deferred Compensation Account and my personal (including related) accounts held more
than 1,000,000 APL shares. No purchases of APL stock were made for any of my personal accounts in July
2010. The Deferred Compensation Account made a single purchase of 61,700 APL shares on July 20, 2010, at
an average price of $10.31 per share, or a total cost of approximately $636,000. Significantly, like the
accounts Omega managed, the Deferred Compensation Account did not seek to profit from the July 28 Elk
City announcement. It did not sell any shares of Atlas Pipeline to the market until August 2011, more than a
year after that announcement. None of that trading pattern is consistent with insider trading.
The allegations based on trades in APL call options in July 2010 are equally unfounded. Between February
and May 2010, Omega sold 11,230 APL call options for premiums totaling approximately $1,160,000. The
options had strike prices of $15.00 and $17.50, and expiration dates of August and November 2010,
respectively. Thus, Omega was selling to the purchasers of those call options the right to buy Atlas Pipeline
stock before expiration at prices of $15.00 or $17.50. The holders of those call options would have a financial
incentive to exercise them if, before expiration, APLs stock price rose above the option strike price.
That remained Omegas position in APL call options at the start of July 2010. If Omega had done nothing
further with its Atlas Pipeline options position in July 2010, then, following the Elk City announcement, when
APLs stock price rose from a July low of $9.16 to $16.22, the holders of the $15.00 call options presumably
would have exercised them. At that point, Omega would have sold some of its Atlas Pipeline stock to the
option holders for the strike price of $15.00 per share, thereby realizing (lawfully, and without taking any
additional steps) more than 90% of APLs stock price following the Elk City announcement.
But Omega didnt do that. Instead, in July 2010, as the price of the August $15.00 options declined to as low
as $0.05 per option, Omega purchased the exact number of APL $15.00 call options it had sold earlier in the
year, which offset its existing APL options position. As a result of flattening out its options position, Omega
didnt realize any gain from the increase in Atlas Pipelines stock price following the Elk City announcement. It
is illogical, and defies common sense, that the SEC would bring an insider trading case based on that trading
pattern.
Additionally, there was an independent economic reason for Omega to purchase call options that July. Selling
call options while long the underlying stock (writing a covered call) is a common, income-generating
strategy, reaping the seller the premium received from the sale of the options. In July 2010, the $15.00
options that Omega had sold for $1.32 in February and March 2010 were trading for as little as $0.05,
generally the lowest possible quoted price for an exchange-traded option.
On July 7, 2010, the day after Atlas Pipelines stock fell to its lowest closing price of the year, Omega began
purchasing those $15.00 call options at a price of just $0.05 per option. Between July 7 and July 13, Omega
flattened out its position in the August $15.00 options for an average price of $0.07 per option. Thus, Omega
was able to flatten out its position while giving up only $0.07 (or 5%) of the $1.32 premium it had received
per option.
Significantly, because its APL options purchases in July offset all of Omegas earlier sales of the same options,
Omega was never long any Atlas Pipeline calls prior to the Elk City announcement. If Omega had established
a long position in APL call options at $0.05 rather than flattening out its position, it would have stood to make
a substantial profit from the increase in the stock price following the announcement. Omega didnt do that.

In short, like its investments in Atlas Pipeline stock, Omegas July 2010 trading in APL options does not suggest
an attempt to profit from inside information. The same is true of options purchases during that period by my
Deferred Compensation Account. Between March and early May 2010, the Deferred Compensation Account
sold APL call options with strike prices of $15 and $17.50 and expiration dates of August and November,
respectively. The total premium received from the sale of those options was approximately $437,000.
Beginning on July 7, 2010, the day after Atlas Pipelines stock reached its lowest closing price of the year, the
Deferred Compensation Account began buying back the same call options it had sold earlier in the year in
order to offset that short position. Like Omega, the Deferred Compensation Account was not long any APL
call options at the time of the Elk City announcement.
The Commissions allegations are also based on trades in Atlas Pipeline bonds in July 2010. As an initial
matter, because the pricing of bonds is generally not as sensitive to corporate news as stock prices are, it is
highly unlikely that someone seeking to profit from an announcement would attempt do so in the bond
market. And, as was the case with its investment in APL stock, Omega was invested in APL bonds well before
July 2010 and had already accumulated a substantial long position by then. Omega began buying two
different fixed-rate Atlas Pipeline bonds (bearing coupons of 8.75% and 8.125%, respectively) in December
2008 a year and a half before the Elk City announcement.
Moreover, as it did with its equity investment in Atlas Pipeline, Omega added to its APL bond position over
time. By July 2010, Omega owned approximately $77 million par value of APL bonds at a total cost of
approximately $53 million. Omega only modestly increased that position in July 2010, purchasing no
additional 8.75% bonds and only $3.5 million par value of 8.125% bonds at a cost of approximately $3.3
million. The firms investment in APL bonds in July 2010 was less than 0.07% of Omegas assets under
management at the time (and, even combined with its APL equity investment in July 2010, was only 0.14% of
assets under management). Omegas investment in APL bonds in July 2010 also represented less than a 5%
increase in Omegas existing position. Thus, there is no evidence that Omega was loading up on bonds
ahead of an anticipated announcement, in an effort to take advantage of inside information.
Furthermore, on July 28, following the Elk City announcement, Omega sold only $701,000 par value of its APL
bonds, or less than 1% of its total APL bond position. Other than those bonds, Omega did not sell any of its
$77 million par value of APL bonds until four months later, when it sold additional bonds on November 29.
Omega continued to maintain a net long position in Atlas Pipeline bonds for more than two years following
the Elk City announcement.
Nor is the APL bond trading in the Deferred Compensation Account or my personal accounts any more
indicative of insider trading. I made a single purchase of $50,000 par value of APL bonds on behalf of my
grandson on July 20 for about $47,000, and the Deferred Compensation Account made a single purchase of
$1,000,000 par value of APL bonds on July 13 for approximately $927,000. Significantly, neither account sold
any APL bonds following the July 28 Elk City announcement. Indeed, there were no sales of APL bonds in
those accounts until February 2012, more than 18 months after the announcement.
It also bears mention that I was at the time the largest investor in Cobalt Capital, the hedge fund run by my
son, Wayne. In July 2010, Cobalt was short APL stock. As such, Cobalt (and by extension, I) stood to lose
money if APLs stock price rose. But, as my son is prepared to testify if need be, I didnt share with him any
information concerning the Elk City transaction or even know what position Cobalt had in APL securities at
the time.
In short, none of the APL trading at issue is indicative of someone trying to position themselves ahead of an
anticipated market-moving announcement, or to reap profits from inside information. Our approximately
eight-year investment in Atlas Pipeline was based on fundamental research, rigorous analysis, and insight

not inside information. Unfortunately, as sometimes happens in our business, this particular investment
turned out to be unsuccessful.
As we have previously informed you, we have hired two of the most highly respected lawyers in the country
to represent us Dan Kramer and Ted Wells of Paul, Weiss, Rifkind, Wharton & Garrison LLP both of
whom are highly experienced in such matters. Our counsel will vigorously defend us against the
Commissions charges.
And as we have previously explained, while you are welcome to ask us any questions you may have from time
to time, we hope you will understand that we cannot discuss the specifics of these matters while they are
ongoing and therefore may not always be able to provide you with the level of detail that you may desire and
that we might otherwise like to share with you.
We continue to be fully committed to managing our clients money and delivering superior risk-adjusted
returns, and we continue to have full confidence that these matters will not affect our ability to continue to
serve your best interests.
There will be a conference call at 4:15 P.M. this afternoon to discuss these matters.
Sincerely,

Leon G. Cooperman
Chairman and Chief Executive Officer
Omega Advisors, Inc.