SEC WINS SUMMARY JUDGEMENT IN INSIDER TRADING CASE
The Commission prevailed on its summary judgment motion in an insider trading case against a husband and wife. SEC v. Jantzen, Case No. 1:10-cv-00740 (W.D. Tex.). The case was brought against John Jantzen, a registered securities broker, and his wife Marleen Jantzen, a former assistant to an executive at Dell, Inc.
The case centers on the acquisition of Perot Systems, Inc. by Dell, announced on September 21, 2009. Following the announcement the share price of Perot Systems increased by about 65%.
Prior to the announcement Mrs. Jantzen learned from internal Dell e-mails information about the then pending tender offer, according to the Commission. She then tipped her husband. On the final day of trading before the announcement, Mrs. Jantzen made a cash transfer to the brokerage account of the couple. Shortly after the transfer Mr. Jantzen purchased 24 call options and 500 shares of Perot Systems. Dell securities were also purchased. Following the deal announcement the couple had one day trading profits of $26,950.50.
In granting the Commissionâ€™s motion for summary judgment the Court found that the two defendants violated Exchange Act Sections 10(b) and 14(e). The Court entered an injunction against each defendant prohibiting future violations of each Section. The order also directed that the defendants pay disgorgement in the amount of their trading profits along with prejudgment interest. Further briefing was ordered on the question of a monetary penalty.
Previously, the Commission resolved an action based on the same transaction which had been brought against Reza Saleh, an employee of Parkcentral Capital Management, LP. , a firm did work for a non-public affiliate of Perot Systems. SEC v. Saleh, Case NO. 3:09-cv-01778 (N.D. Tex. Filed Sept. 23, 2009). The action, filed two days after the take-over announcement, claimed that Mr. Saleh traded while in possession of inside information on the same day the Jantzens traded. He purchased 9,332 call options scheduled to expire in October 2009. After the announcement he sold the options, realizing a profit of $8.6 million.
According to the complaint, Mr. Saleh asked questions of a Parkcentral director who was also a Perot Systems director which indicated that he knew material, non-public information about the then pending transaction. This included the fact that Perot Investments would be acquired at a premium. At the time Mr. Saleh had a Perot Systems e-mail account. The purchase and sale transactions violated company policy.
Defendant Saleh settled with the Commission, consenting to the entry of a permanently injunction prohibiting future violations of Exchange Act Sections 10(b) and 14(e). The order also directed Mr. Saleh to pay disgorgement and a civil penalty in an amount to be determined by the Court.