There has been a great deal of controversy about the
SEC's policy of permitting defendants to settle enforcement actions without
admitting or denying the facts alleged in the complaint. While the policy
traces its origins to the early days of the Enforcement Division, and is used
by many Federal agencies, some critics claim it should be abandoned and that
settling defendants should be required to make admissions. The Commission has
staunchly defended its policy. Thus those settling with the agency typically
are not required to make admissions. There may be some instances, however, in
which a defendant may not be able to rely on the policy. That may well have
been the case for Juan Carlos Bertini, accused of insider trading by the
Commission. SEC v. Bertini, Case No. C 13 1292 (N.D. Cal. Filed March
The case centers around the acquisition of Del Monte
Foods Company by an investor group composed of Centerview Partners, Kohlberg
Kravis Roberts & Co. and Vestar Capital Partners. The deal was announced on
November 25, 2010 at $19 per share, a premium to market.
Mr. Bertini was employed at Del Monte as a vice president
of finance. In that position he regularly had confidential, sensitive
information of the company. He was subject to the firm's insider trading
By no later that November 11, 2010 Mr. Bertini was
invited to join a select group of Del Monte employees working on the deal.
Specifically, the group was charged with acquiring information for the investor
group and the Del Monte Board of Directors. Mr. Bertini reported directly to
the CEO and CFO. Through his position Mr. Bertini came into possession of
material, non-public information about the proposed transaction. To help
preserve the confidentiality of the deal, it was code named "Project
Within days of becoming a member of the working group Mr.
Bertini began purchasing shares of his company. Between November 18, 2010 and
November 23, 2010 he spend $135,000 to acquire 8,000 shares of Del Monte stock.
Although he had a brokerage account, the purchases were made through his
Subsequently, FINRA contacted Del Monte about certain
trading that took place in advance of the take-over announcement. As part of
the inquiry Del Monte's counsel questioned Mr. Bertini. Rather than admit his
error, Mr. Bertini claimed that the trades had actually been placed by his
mother. The purchases were based on articles his mother read, Mr. Bertini told
investigators. When he learned of the trades he insisted they were unacceptable
and directed her to sell the shares.
Mr. Bertini settled insider trading charges with the
Commission. He consented to the entry of a permanent injunction prohibiting
future violations of Exchange Act Section 10(b) and agreed to pay disgorgement
of $16,035, prejudgment interest and a civil penalty of $32,070. He also agreed
to the entry of a five year officer and director bar. In entering into the
settlement Mr. Bertini did not admit or deny the facts alleged in the complaint
to the Commission. Chances are, however, that Mr. Bertini was not able to take
that position with his mother. See also Lit. Rel. No. 22659 (March 22,
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