A CONTINUED FOCUS ON INSIDER TRADING
The SEC continued its focus on insider trading, filing another settled action against a corporate executive. SEC v. Fogel, Case No. 1:10-CV-10097 (D. Mass. Jan. 22, 2010). The case is against Avi Fogel, the former Vice President of strategic initiatives at EMC Corporation, a Massachusetts based company. It centers on the acquisition of Document Sciences Corporation, or DOCX, a global provider of customer communications management solutions by EMC. The public announcement of the deal was made prior to the opening of the markets on December 27, 2007.
Mr. Fogel joined EMC in June 2006 when it acquired the company at which he had been the chief executive officer. He later assumed the position of VP of strategic initiatives in its Content Management division.
In late 2006 Mr. Fogel was asked to lead a team to evaluate a certain product category. The goal was to analyze whether the company should grow into the market organically or through acquisition. By May 2007 Mr. Fogel e-mailed his supervisor that his team strongly recommended moving forward with an acquisition. DOCX was put on the short list. The next month, Mr. Fogel informed his supervisor that his team strongly recommended moving forward with a deal to acquire DOCX, a company with whom EMC had a prior arrangement.
At an August 2007 meeting of the internal committee charged with evaluating the acquisition, it was decided to move forward with the deal. Mr. Fogel prepared the materials for the committee and attended the meeting.
By October, the M&A committee of the board approved moving forward with a letter of intent to DOCX. That letter, however, did not meet the expectations of DOCX. Mr. Fogel responded to an e-mail from the internal committee about the price that the minimum DOCX would accept was $54 million. The next month, Mr. Fogel noted in an email to the internal committee that the deal was moving forward. He subsequently communicated with DOCX executives about the acquisition process.
Between November 23 and November 30 Mr. Fogel purchased 20,000 shares of DOCX stock. Two days before the deal announcement, he purchased another 10,000 shares. Following the announcement the share prices increased from just over $8 to over $14 for a 76% increase.
To settle the case, Mr. Fogel consented to the entry of a permanent injunction prohibiting future violations of the antifraud provisions. He also agreed to disgorge $191,393, pay prejudgment interest of $14,639.62 and to pay a penalty of $191,363. See also Litig. Rel. 21392 (Jan. 22, 2010).