In a Settlement Order (Order) dated July 2, 2010, hedge fund management firm Appaloosa Management L.P. agreed to pay approximately $1.3 million to settle SEC charges that the firm violated rules barring the purchase of shares in a public offering following a short sale of shares of the same issuer. The case involved Appaloosa’s participation in a follow-on offering by Wells Fargo & Co. after Appaloosa had sold short more than one million Wells Fargo shares. The SEC found that the firm violated Rule 105 of Regulation M of the Securities Exchange Act of 1934 (Rule 105) by making short sales during the Rule 105 restricted period preceding its participation in a public offering by Wells Fargo & Co. According to the Order, Appaloosa made disgorgeable profits of $842,500 through the purchase of shares in the offering and the short sales. Without admitting or denying the SEC’s findings, Appaloosa agreed to adopt, implement and maintain written compliance policies and procedures to prevent future violations of Rule 105. In addition, it agreed to disgorge $842,500 in profits and pay a civil penalty of $421,250 plus prejudgment interest of $40,773. This article summarizes the case background and the SEC’s findings and details agreed-upon remedial action as set forth in the Order.