Part VII: SEC Enforcement Trends and Priorities, 2008 – Insider Trading (cont)
Last year the SEC also brought insider trading cases against corporate executives, a group of “pillow talk” cases and against attorneys. Examples of cases brought against corporate executives include:
–NSD Bancorp director: SEC Lenzner, Civil Action No. 07-cv-01404 (W.D. P.A. Oct. 17, 2007), a settled insider trading action against bank director Charles Lenzner and a person he tipped, Michael Pitterich, about a merger.
–Corporate director: SEC v. Keeney, Case No. 1:07CV010 (D.D.C. Sept. 25, 2007), settled case against a director of Frederick’s of Hollywood for tipping.
–Bank VP: SEC v. Glamb, Civil Action No. 07-CV-2743 (D.N.J. June 13, 2007), settled insider trading case against former Hudson United Bankcorp Asst. VP who traded on inside information obtained from a co-worker.
A number of “pillow talk” cases involving spouses and family member were brought last year. In some instances the spouses traded together while in others one spouse traded on information obtained from the other. In still other cases family members traded together. Examples of these cases include:
–Spouses trading together: SEC v. Wang, Civil Action No. 07-3715 (S.D.N.Y. May 10, 2007); U.S. v. Wang, Case No. 1:07-cr-00730-CM (S.D.N.Y. May 9, 2007), an insider trading case in which two married Wall Street professionals traded on information obtained from the wife’s employment at Morgan Stanley through her mother’s account in Beijing. The couple has pled guilty; the SEC case is pending.
–Husband & wife: SEC v. Suman, No. 07-C-6625 (S.D.N.Y. July 24, 2007), insider trading case in litigation which alleges that husband misappropriated inside information that he and his wife used to trade.
–Husband: SEC v. Melton, Civil Action No. cv 07-2655 GHK (C.D. Cal. April 23, 2007), settled insider trading case where husband traded on information obtained from his wife and she instructed him not to trade.
–Father & sons: SEC v. Aragon Capital Management, LLC, Case No. 1:07-cv-00919 (S.D.N.Y. Feb. 2, 2007) an insider trading case in litigation involving a father and his sons.
Finally, three cases were brought against attorneys last year:
—SEC v. Belcher, Case No. 07-CV-02507 (D. Col. Dec. 3, 2007), settled case against attorney who obtained the information from his client.
—SEC v. Heron, Civil Action No. 07-CV-01542 (E.D. Pa. April 3, 2007), insider trading case in litigation against a former general counsel of a company.
—SEC v. Schwinger, Civil Action No. 1:07-CV-01047 (D.D.C. June 13, 2007), settled insider trading action against managing partner of law firm who learned the information from a lateral partner candidate.
Next: The FCPA, another new enforcement priority