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Wednesday, December 17, 2014

FUND MANAGER SETTLES SEC INSIDER TRADING CASE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23151 / December 8, 2014
Securities and Exchange Commission v. Reema D. Shah and Robert W. Kwok, Civil Action No. 12-CV-4030 (S.D.N.Y.) (ALC)
Former Ameriprise Fund Manager Settles SEC Insider Trading Case

The Securities and Exchange Commission announced today that on December 8, 2014, the Honorable Andrew L. Carter, Jr. of the United States District Court for the Southern District of New York entered a final judgment against Reema D. Shah in SEC v. Reema D. Shah and Robert W. Kwok, 12-CV-4030, an insider trading case the SEC filed on May 21, 2012. The SEC alleged that Shah, a former mutual fund and hedge fund portfolio manager at RiverSource Investments, LLC, an investment adviser subsidiary of Ameriprise Financial, Inc., illegally tipped and traded on material, nonpublic information concerning Yahoo! Inc. and Moldflow Corporation.

The SEC's complaint alleged that in July 2009, Robert W. Kwok, a former Senior Director of Business Management at Yahoo, tipped Shah material, nonpublic information concerning an upcoming announcement of an internet search engine partnership agreement between Yahoo and Microsoft Corporation. The SEC alleged that, based on Kwok's tip, Shah caused certain of the funds she helped manage, including the Seligman Communications and Information Fund, to purchase approximately 700,000 shares of Yahoo. The shares were later sold resulting in profits of $388,807. The SEC also alleged that in April 2008, Shah tipped Kwok material, nonpublic information concerning an upcoming acquisition of Moldflow by Autodesk, Inc., which had been misappropriated by an Autodesk insider and tipped to Shah. The SEC alleged that, based on this tip, Kwok purchased 1,500 shares of Moldflow in a personal account, which he sold after announcement of the acquisition, realizing profits of approximately $4,750. The Court previously entered a final judgment, by consent, against Kwok.

The final judgment against Shah, entered by consent, orders her to pay disgorgement of $388,807 plus prejudgment interest of $1,296, and permanently enjoins her from any future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. No penalty was imposed in light of Shah's sentence in a parallel criminal case and her cooperation. In the parallel criminal action, Shah previously pled guilty to securities fraud and conspiracy to commit securities fraud and recently was sentenced to two years of probation, and ordered to forfeit $11,751 and pay a $500,000 criminal fine. United States v. Reema Shah, 12 CR 0404 (S.D.N.Y.). In related administrative proceedings, Shah previously consented to a Commission Order barring her from association with any investment adviser, broker, dealer, municipal securities dealer or transfer agent. In the Matter of Reema D. Shah, File No. 3-15084 (Oct. 31, 2012).

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