ASSETS OF FOUR CHINESE CITIZENS FROZEN BY SEC FOR INSIDER TRADING

The following excerpt is from the SEC website: “Washington, D.C., Dec. 6, 2011 — The Securities and Exchange Commission today announced that it has frozen the assets of four Chinese citizens and a Chinese-based entity charged with insider trading in advance of a merger announcement by educational companies based in London and Beijing. The SEC moved quickly to obtain an emergency court order to freeze assets just two weeks after the suspicious trading by Sha Chen, Song Li, Lili Wang, and Zhi Yao, who have U.S.-based brokerage accounts. Some of them already attempted to liquidate or transfer their illicit profits. The SEC alleges that they purchased American Depository Shares (ADS) of Beijing-based Global Education and Technology Group in the two weeks leading up to a November 21 public announcement of a planned merger with London-based Pearson plc. Some of their brokerage accounts were dormant until they bet heavily on Global Education shares, and some of the purchases made either equaled or exceeded the stated annual income of that trader. After the agreement was announced, they immediately began selling some of their Global Education shares. Their illicit gains totaled more than $2.7 million. “On the basis of non-public information, these traders suddenly purchased massive amounts of Global Education shares in U.S. brokerage accounts that had been largely inactive,” said Merri Jo Gillette, Director of the SEC’s Chicago Regional Office. “We’re pleased the court immediately granted our order to freeze these accounts before proceeds from the illegal trades could be transferred outside U.S. jurisdiction.” The SEC also charged All Know Holdings Ltd. and one or more unknown purchasers of Global Education stock in its complaint filed on December 5 in U.S. District Court for the Northern District of Illinois. According to the SEC’s complaint, Pearson and Global Education each announced before trading began on November 21 that Pearson agreed to acquire all of Global Education’s outstanding stock for $294 million ($11.006 per share traded in the U.S.). Global Education’s stock price increased 97 percent that day, from $5.37 to $10.60. The SEC alleges that Chen, Li, Wang, and Yao made their purchases of Global Education’s ADS shares while in possession of material, non-public information about the merger. A Global Education co-founder and Chairman of the Board apparently tipped Wang and possibly others about the potential acquisition. Wang then transferred new funds into her previously dormant brokerage account and bought 28,000 Global Education shares. The others also engaged in similarly suspicious trading in Global Education stock, which was typically thin. On November 18, the last trading day before the acquisition announcement, their purchases accounted for more than 35 percent of the entire day’s trading volume for the company’s shares, which trade on the NASDAQ. The SEC alleges that the defendants each violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief, the SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties. The emergency court order that the SEC obtained on December 5 on an ex parte basis freezes more than $2.7 million of defendants’ assets held in U.S. brokerage accounts and, among other things, grants expedited discovery and prohibits the defendants from destroying evidence. The SEC’s investigation, which is continuing, has been conducted by Allison M. Fakhoury, Brian N. Hoffman, Steven L. Klawans, Delia L. Helpingstine, John E. Kustusch, Felisha K. Clay and Terri Y. Roberts in the Chicago Regional Office. The SEC’s litigation effort will be led by Benjamin J. Hanauer and Daniel J. Hayes. The Commission thanks the Financial Industry Regulatory Authority for its assistance in this matter.”

SEC SETTLES INSIDER TRADING CHARGES AGAINST CALIFORNIA WOMAN

The following excerpt is from the SEC website: October 25, 2011 “The United States District Court for the Northern District of California approved a proposed settlement of the Securities and Exchange Commission’s insider trading claims against Annabel McClellan. The Commission alleged that Ms. McClellan obtained confidential information about pending mergers and acquisitions from her husband, a former partner in the San Francisco offices of Deloitte Tax LLP, to tip her sister and brother-in-law in London. As alleged by the Commission, Ms. McClellan’s relatives used the information to place trades in advance of the public announcements of the transaction, making millions of dollars in illicit profits. Without admitting or denying the Commission’s allegations, Ms. McClellan consented to pay a $1 million civil money penalty. Ms. McClellan also consented to the entry of a final judgment that will enjoin her permanently from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The court entered the final judgment against Ms. McClellan on October 25, 2011. Ms. McClellan previously pleaded guilty to one count of obstructing the Commission’s investigation into the insider trading scheme. The United Kingdom Financial Services Authority filed insider trading charges against Ms. McClellan’s relatives and three others in November 2010. In a related action, the Commission requested the dismissal of the insider trading claims against Ms. McClellan’s husband, Arnold A. McClellan.”

ADDITIONAL CHARGES FILED BY SEC IN MARINER ENERGY INC. INSIDER TRADING CASE

The following excerpt is from the SEC website: “Washington, D.C., Oct. 21, 2011 – The Securities and Exchange Commission today announced additional charges in its insider trading case against Denver-based traders who traded on confidential information in the securities of Mariner Energy Inc. ahead of the oil and gas company’s $3.9 billion takeover by Apache Corporation in April 2010. In its initial complaint filed on Aug. 5, 2011, the SEC alleged that Mariner Energy board member H. Clayton Peterson tipped his son with confidential details about Mariner Energy’s upcoming acquisition. Drew Clayton Peterson, who was a managing director at a Denver-based investment adviser, then used the inside information to purchase Mariner Energy stock for himself and others. An amended complaint filed today adds two more defendants to the case – money manager Drew K. Brownstein who is a longtime friend of Drew Peterson, and the hedge fund advisory firm he controls, Big 5 Asset Management LLC. The SEC alleges that Brownstein traded Mariner Energy securities on the basis of inside information he received from Drew Peterson and reaped illicit profits of more than $5 million combined in his own account, the accounts of his relatives, and the accounts of two hedge funds managed by Big 5. “This case is further evidence of the pervasive nature of insider trading by hedge funds, and a sobering reminder that such conduct is not limited to the immediate vicinity of Wall Street but is taking place in cities around the country,” said Sanjay Wadhwa, Deputy Chief of the SEC Enforcement Division’s Market Abuse Unit and Associate Director of the New York Regional Office. “The SEC is firmly committed to rooting out this illegal activity wherever it occurs, and those who engage in this conduct should consider the severe consequences they will face when caught.” According to the SEC’s amended complaint, Drew Peterson repeatedly tipped Brownstein about the impending acquisition of Mariner Energy as he learned the information from his father. Brownstein caused two Big 5 hedge funds – the Lion Global Fund LLLP and the Lion Global Master Fund Ltd. – to purchase large quantities of Mariner Energy stock and call option contracts on the basis of the inside information. This was the first time that the Big 5 hedge funds had ever traded Mariner Energy stock or options. Brownstein also purchased thousands of shares of Mariner Energy stock and call option contracts for the accounts of his relatives and for his personal brokerage account. In the days following the announcement of the deal, Brownstein liquidated the positions he had accumulated in Mariner Energy securities. The SEC’s amended complaint charges each of the defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a final judgment permanently enjoining them from future violations of the above provisions of the federal securities laws, ordering them to disgorge their ill-gotten gains plus prejudgment interest, and ordering them to pay financial penalties. The SEC also seeks to permanently prohibit Clayton Peterson from acting as an officer or director of any publicly registered company. The SEC’s investigation was conducted by Joseph Sansone, a member of the SEC’s Market Abuse Unit in New York, with assistance from Neil Hendelman of the New York Regional Office and Jay Scoggins, Jeffrey Oraker, Bruce Ketter and Craig Ellis of the Denver Regional Office. The SEC acknowledges the ongoing assistance and cooperation of the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation. The SEC’s investigation is continuing“.

ALLEGED FAMILY INSIDER TRADING SCHEME IN AON HEWITT ASSOCIATES MERGER

October 11, 2011 MERGER AND AN ALLEGED INSIDE TRADING SCHEME IN HEWITT ASSOCIATES STOCK The following is an excerpt from the SEC website: “The Securities and Exchange Commission today filed a civil injunctive action in the U.S. District Court for the Northern District of Illinois charging M. Jason Hanold, a former managing director at an executive search firm in Chicago, with illegal insider trading in Hewitt Associates stock in advance of the July 12, 2010 public announcement of a merger agreement between Aon and Hewitt Associates. The SEC alleges that on July 7, Hanold bought shares of Hewitt Associates stock after learning of the impending merger from his wife, who was an executive at Aon at the time. He did so despite requests from his wife that he keep this nonpublic information confidential. According to the SEC’s complaint, Hanold’s wife learned on or about July 6, 2010 that Aon and Hewitt Associates had reached a merger agreement and that a public announcement was imminent. Hanold’s wife shared this information with Hanold in a telephone call that evening. Shortly after the call ended, Hanold’s wife sent him two emails in which she requested that he not share this information. Hanold replied, “I won’t, no need. I only wish we bought their stock!!!” The next day, July 7, 2010, Hanold purchased 831 shares of Hewitt Associate’s stock in advance of the July 12, 2010 public announcement of the agreement between Hewitt Associates and Aon. The announcement caused Hewitt Associates’ stock price to increase by more than 32%. Hanold sold all of his shares on July 12, 2010 for a profit of $10,241. Without admitting or denying the allegations in the complaint, except as to jurisdiction, Hanold has consented to entry of a final judgment that permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Hanold has also consented to pay $20,766 in disgorgement, prejudgment interest and civil penalties. The settlement is subject to approval by the court. James G. O’Keefe conducted the SEC’s investigation in this matter. The Commission acknowledges the assistance of FINRA in this investigation.”

SEC ALLEGED SPOUSE OF FORMER PLAYBOY CEO WAS AN INSIDE TRADER IN PLAYBOY SECURITIES

The following is an excerpt from the SEC website: "August 3, 2011 The Securities and Exchange Commission today filed a civil injunctive action in the U.S. District Court for the Northern District of Illinois charging William A. Marovitz, the spouse of former Playboy CEO Christie Hefner, with illegal insider trading in Playboy stock in advance of public news announcements. The SEC alleges that on five occasions between 2004 and 2009, Marovitz traded based on confidential information that he misappropriated from Hefner, who was the CEO of Playboy during most of the trades at issue. Marovitz bought and sold Playboy stock in his own brokerage accounts ahead of public news announcements despite instructions from his wife that he should not trade in shares of Playboy and a warning from the general counsel of Playboy about his buying or selling Playboy stock. In total, Marovitz gained profits and avoided losses of $100,952. According to the SEC’s complaint, between 2004 and 2009 Marovitz misappropriated confidential, non-public information about Playboy from Hefner. Hefner made clear to Marovitz in 1998, both personally and through Playboy’s general counsel, that she expected him to keep any information he learned from her about Playboy confidential and not to trade based on this information. In November 2009, Marovitz learned about Iconix’s potential acquisition of Playboy and used that confidential information to buy Playboy stock in advance of a public announcement of a potential merger, which caused a 42% increase in Playboy’s stock price. When Iconix ended its efforts to acquire Playboy in December 2009, Marovitz sold Playboy stock before the news became public, resulting in a 10% decrease in Playboy’s stock price. The SEC also alleges that Marovitz also misused confidential information he misappropriated from Hefner about Playboy’s earnings announcements and stock offering to trade in Playboy. In May 2008, Marovitz sold Playboy stock the day before Playboy’s first quarter 2008 negative earnings announcement caused its stock price to decline by 9%. Similarly, in August 2004, Marovitz sold all of his Playboy stock the day before Playboy reported a second quarter loss resulting in an 18% drop in its stock price. And, in April 2004, Marovitz purchased Playboy stock before Playboy announced an offering of its Class B stock, which caused its stock price to increase by 8%. Without admitting or denying the allegations in the complaint, except as to jurisdiction, Marovitz has consented to entry of a final judgment that permanently enjoins him from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Marovitz has also consented to pay $168,352 in disgorgement, prejudgment interest and civil penalties. The settlement is subject to approval by the court. This case originated during a SEC examination of a broker-dealer. The Commission acknowledges the assistance of the Internal Revenue Service in this matter.”

SEC ALLEGES THERE WAS A WHITE COLLAR CRIME FAMILY

The following is an excerpt from the SEC website: July 22 , 2011 Securities and Exchange Commission v. Gerald Harold Levine, et al., 2:07-CV-00506 (LDG/RJJ) (District of Nevada, Complaint filed April 17, 2007) Court Enters Judgments Against Las Vegas Husband and Wife For Securities Fraud The Securities and Exchange Commission announced that on July 8, 2011, the U.S. District Court for the District of Nevada entered final judgments against MaryAnn Metz, the former secretary/treasurer and a director of Nu Star Holdings, Inc. (“Nu Star”), and Darin Scott Metz (also known as Damien Metz), her husband, who was president of a related company named Global Environmental Systems, Inc. The Metzes were the only remaining defendants in a pending offering fraud and market manipulation case. The Commission’s complaint, filed on April 17, 2007, alleged that the Metzes and others, including MaryAnn’s parents Gerald and Marie Levine, engaged in a fraudulent scheme to sell approximately $4.5 million worth of shares of Pink Sheet companies, primarily to investors in the United Kingdom, out of boiler rooms in Barcelona, Spain and Santa Ana, California, in violation of the federal securities laws. The complaint also alleged that the Metzes participated in a related market manipulation scheme involving stock of the same Pink Sheet companies, including Nu Star. The Commission alleged that MaryAnn Metz, who was one of two officers and directors of Nu Star, participated in the offering fraud by: (1) failing to disclose that the Levines, who were Nu Star’s majority shareholders, had previously been found liable for committing securities fraud; (2) failing to disclose that the president of Nu Star had been suspended from the practice of law for three years; and (3) failing to disclose to investors the excessive commissions that were paid to the boiler room sales force from the proceeds of the sale of Nu Star stock. The complaint also alleged that both Metzes purchased Nu Star shares in trades that were orchestrated with Gerald Levine and others at increasing prices in order create the illusion that there was a robust and increasing market for Nu Star’s shares, and that the shares had value. Without admitting or denying the Commission’s allegations, except as to jurisdiction, the Metzes consented to the final judgments, which bar them from serving as officers or directors of publicly traded companies. MaryAnn is barred permanently, and Darin is barred for ten years. The final judgments also permanently bar both Metzes from participating in the offering of a penny stock. Additionally, MaryAnn Metz is permanently enjoined from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (“Exchange Act”), while Darin Metz is permanently enjoined from violating Exchange Act Section 10(b) and Rule 10b-5. The final judgments also order Mary Ann Metz to disgorge $172,088, but waive payment and decline to impose penalties against her or Darin Metz based on their financial inability to pay. MaryAnn Metz also consented to the dismissal of her appeal of the order granting the Commission’s motion for summary judgment against her. SEC v. MaryAnn Metz, Case No. 10-17271 (9th Cir.) The Court previously granted the Commission’s motion on summary judgment against Nu Star, the Levines, and Alan Copeland. The Levines’ appeal of that decision is pending. SEC v. Gerald Levine, et al., Case No. 10-16238 (9th Cir.)"

FORMER EXECUTIVE AT PITNEY BOWES IS CHARGED WITH INSIDER TRADING

The following excerpt is from the SEC website:

The Securities and Exchange Commission filed a civil injunctive action today in the United States District Court for the District of Columbia charging Howard B. Wildstein, a former Pitney Bowes, Inc. executive, with insider trading in the stock of MapInfo Corporation in advance of the March 15, 2007 public announcement that Pitney Bowes had entered into a definitive agreement to acquire MapInfo.
According to the SEC's complaint, Wildstein acquired material nonpublic information concerning the acquisition through his employment at Pitney Bowes. In particular, as alleged in the complaint, in late February 2007, Wildstein learned that MapInfo was a potential target of Pitney Bowes and that executives of Pitney Bowes who were responsible for mergers and acquisitions had recently visited MapInfo. On March 1 and March 2, 2007, based on this material nonpublic information, Wildstein purchased 8,000 shares of MapInfo common stock. After the acquisition was publicly announced, Wildstein sold all 8,000 shares, realizing an unlawful profit of $51,177.
Without admitting or denying the allegations in the complaint, Wildstein has consented to the entry of a final judgment that permanently enjoins him from violating Sections 10(b) and 14(e) of the Securities and Exchange Act of 1934, and Rules 10b-5 and 14e-3 thereunder, and requires him to pay a total of $114,848 in disgorgement, prejudgment interest, and civil penalties. The settlement is subject to approval by the court.”

SEC ANNOUNCES AN “ALL IN THE FAMILY” INSIDER TRADING CASE

The following case is an excerpt from the SEC web site:

“On March 17, 2011, the Securities and Exchange Commission charged four executives at a Louisville-based steel processing company and four of their family and friends with illegal insider trading in advance of the company’s acquisition.
The SEC alleges that Patrick Carroll, William “Tad” Carroll, David Mark Calcutt and David Stitt – who are vice presidents of sales at Steel Technologies – traded based on confidential information about their company’s acquisition by Mitsui & Co. (USA) Inc. Three of the four executives illegally tipped family members or friends. The ring of eight traders together purchased $578,000 of Steel Technologies stock in the month prior to the public announcement of the acquisition and made $320,000 in illegal profits.
The SEC alleges that Patrick Carroll tipped his son James Carroll, and Calcutt tipped his brother Christopher Calcutt. David Stitt tipped his friend John Monroe, who then tipped another friend Stephen Somers.
According to the SEC’s complaint filed in U.S. District Court for the Western District of Kentucky, Patrick and Tad Carroll are brothers of Michael Carroll, who is the president and chief operating officer of Steel Technologies. Patrick traded after Michael introduced him to Mitsui representatives who were touring the Steel Technologies facility where Patrick worked. Patrick tipped his son James, who then purchased his own Steel Technologies stock shortly before the acquisition was publicly announced. Tad bought more than $84,000 of Steel Technologies stock approximately one week before the public announcement following his own communications with Michael.
The SEC alleges that before getting inside information about the forthcoming acquisition, Calcutt liquidated nearly all of his company stock. However after he went on a hunting trip with Michael Carroll, Calcutt soon started aggressively buying Steel Technologies stock at higher prices. He also tipped his brother Christopher Calcutt, who then sold all of his shares in another company for a loss and used that money to buy Steel Technologies stock on margin to increase his illicit gains.
According to the SEC’s complaint, Stitt, Monroe and Somers have known each other since childhood. Stitt learned about the forthcoming acquisition on the Friday before the public announcement and immediately purchased Steel Technologies stock that same day. Over the weekend, Stitt told Monroe about the forthcoming acquisition. On Monday, Monroe passed the inside information to Somers. That same day, Monroe told his broker to immediately open a new account so he could buy Steel Technologies stock. Somers also immediately traded based on the inside information. During the SEC’s investigation, Stitt and Monroe contradicted each other’s testimony about their communications and advance knowledge of the acquisition.
The SEC’s complaint charges the eight defendants with securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission seeks permanent injunctive relief, disgorgement of illicit profits with prejudgment interest, and the imposition of monetary penalties against all defendants.”