02/16/2011 02:35:00 PM EST
SEC Settles with Four of Nine in Insider Trading Case
The SEC concluded settlements with four of nine
defendants in an on-going insider trading case centered on a market
professional tipping others with material non-public information he
misappropriated from his wife. SEC v. Devlin, Case No. 20831 (S.D.N.Y.
Filed Dec 18, 2008).
Defendant Matthew Devlin who is at the center of the case
is a former registered representative at Lehman Brothers, Inc. His wife was a
partner in the New York City office of an international public relations firm.
Through that position she had access to inside information on pending corporate
Over a four year period beginning in March 2004 Mr.
Devlin is alleged to have misappropriated inside information regarding thirteen
transactions involving: InVision Technologies, Inc.; Eon Labs, Inc., Mylan,
Inc.; Abgenix, Inc.; Aztar Corporation; Veritas, DGC, Inc.; Mercantile
Bankshares Corporation; Alcan, Inc.; Ventana Medical Systems, Inc.; Pharmion
Corporation; Take Two Interactive Software, Inc.; Anheuser-Busch, Inc; and Rohm
and Haas Company. According to the SEC a series of tips and illegal trades
- Mr. Devlin tipped his friend and client, defendant
Jamil Bouchareb about twelve deals in which he traded. He also tipped his
co-worker defendant Frederick Bowers on at least three transactions in which he
traded. He then tipped one of his clients Thomas Faulhaber who is also a
defendant. In addition Mr. Devlin tipped defendant Eric Holzer, an attorney at
a large New York law firm who traded on at least three deals and Jeffrey
Glover, another Lehman client, who traded in five deals.
- Mr. Boucharbeb tipped his business partner defendant
Daniel Corbin who traded in four deals through accounts in the name of his
companies, Augustus Management LLC and Corbin Investment Holdings LLC, both of
which are defendants. He also tipped his girl friend Maria Checa, a relief
defendant, who traded in some deals.
- Daniel Corbin tipped his father and relief defendant
Lee Corbin, an attorney, who traded in four deals and had an interest in Corbin
The complaint, which alleges violations of Exchange Act
Sections 10(b) and 14(e), claims that the group made illegal trading profits of
$4.8 million. Mr. Devlin furnished the information to curry favor and was
rewarded with various gifts.
The Commission announced settlements with defendants
Glover, Bower, Faulhaber and Holzer. Each settling defendant consented to the
entry of a permanent injunction prohibiting future violations of Exchange Act
Sections 10(b) and 14(e). In addition:
- Mr. Glover agreed to pay disgorgement of $209,356 along
with prejudgment interest and a civil penalty of $305,761. In a related
administrative proceeding he consented to the entry of an order barring him
from the securities business.
- Mr. Bowers consented to the entry of a similar bar
order and agreed to pay a $12,000 civil penalty. He also pleaded guilty to
conspiracy and securities fraud in the parallel criminal case and was sentenced
to three years probation and ordered to pay a $15,000 fine and forfeit $12,000.
U.S. v. Bowers, No. 1:09-cr-00496 (S.D.N.Y.).
- Mr. Faulhaber also agreed to the entry of a bar order
and to pay disgorgement of $235,300 along with prejudgment interest and a civil
penalty of $235,300.
- Mr. Holzer agreed to pay disgorgement of $52,922 along
with prejudgment interest and a civil penalty of $172,269. He also agreed to
the entry of an order in a related administrative proceeding which bars him
from appearing and practicing before the Commission as an accountant. In the
related criminal case he pleaded guilty to securities fraud and conspiracy and
was sentenced to five years probation and ordered to pay a fine of $15,000 and
forfeit over $119,300. U.S. v. Holzer, No. 1:09-cr-00470 (S.D.N.Y.).
The parallel criminal cases are discussed here. See also Lit. Rel. No. 21854
(Feb. 14, 2011).
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