FORMER BASEBALL PRO CHARGED WITH INSIDER TRADING

The following is an excerpt from the SEC website: August 4, 2011 “The Securities and Exchange Commission today charged former professional baseball player Doug DeCinces and three others with insider trading ahead of a company buyout. The SEC alleges that DeCinces and his associates made more than $1.7 million in illegal profits when Abbott Park, Ill.-based Abbott Laboratories Inc. announced its plan to purchase Advanced Medical Optics Inc. through a tender offer. The SEC alleges that DeCinces, who lives in Laguna Beach, Calif., received confidential information about the acquisition from a source at Santa Ana, Calif.-based Advanced Medical Optics. DeCinces immediately began to purchase shares of Advanced Medical Optics in several brokerage accounts, buying more throughout the course of the impending transaction as he received updated information from his source. During this time, DeCinces also illegally tipped three associates who traded on the confidential information – physical therapist Joseph J. Donohue, real estate lawyer Fred Scott Jackson, and businessman Roger A. Wittenbach. DeCinces agreed to pay $2.5 million to settle the SEC’s charges, and the three others also agreed to settlements. According to the SEC’s complaint filed in U.S. District Court for the Central District of California, DeCinces received the material, nonpublic information from an employee at Advanced Medical Optics. DeCinces knew that his source was under a duty to keep the information confidential. In the weeks preceding the public announcement, DeCinces bought Advanced Medical Optics stock on several occasions, eventually totaling at least 83,700 shares in several brokerage accounts he controlled. Some of these accounts were in his grandchildren’s names. On at least one occasion, DeCinces funded his purchase of shares by liquidating a diverse portfolio of 110 stocks. When a public announcement was made by the companies on Jan. 12, 2009, the stock price for Advanced Medical Optics increased 143 percent, and DeCinces sold all of his shares for $1.2 million in profits. According to the SEC’s complaint, Donohue was DeCinces’s physical therapist at the time of the illegal trading. He bought 5,000 shares of Advanced Medical Optics stock in December 2008 and January 2009 on the basis of confidential information received from DeCinces about the impending transaction. Donohue made $75,570 when he sold the stock on the same day as the public announcement. DeCinces later asked Donohue whether he had sold his stock and congratulated him. According to the SEC’s complaint, DeCinces and Jackson shared business and social interests. During a Jan. 8, 2009, breakfast meeting, Jackson used his mobile handheld device to buy 8,500 shares of Advanced Medical Optics stock on the basis of the confidential information that DeCinces communicated to him. Jackson bought additional shares later that day and again the next day, and following the public announcement sold all of his shares for a profit of $140,259. DeCinces and Wittenbach have been longtime friends, according to the SEC’s complaint. After DeCinces tipped Wittenbach with confidential information about the impending transaction, Wittenbach bought 15,000 shares of Advanced Medical Optics stock on January 8. He also called his sister and recommended that she buy 1,000 shares of the stock, which she did later that day. On the same day of the public announcement, Wittenbach sold all of his shares for a profit of $201,692. He again called his sister and told her to sell her stock, which she did for a profit of $13,214. Without admitting or denying the SEC’s allegations, DeCinces, Donohue, Jackson, and Wittenbach agreed to settle the charges against them by consenting to the entry of final judgments permanently enjoining them from violating Sections 10(b) and 14(e) of the Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. DeCinces agreed to pay disgorgement of $1,282,691, prejudgment interest of $19,311, and a penalty of $1,197,998 for a total of $2.5 million. Donohue agreed to pay disgorgement of $75,570 and a penalty of $37,785 for a total of $113,355. Jackson agreed to pay disgorgement of $140,259, prejudgment interest of $12,508, and a penalty of $140,259 for a total of $293,026. Wittenbach agreed to pay disgorgement of $201,692, prejudgment interest of $5,768, and a penalty of $214,906 for a total of $422,366. The settlements are subject to final approval by the court.”

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.”

CFTC FINAL RULES: THE DODD-FRANK ACT

The following excerpt is from the CFTC website: "Ends and Means Opening Statement by Commissioner Scott D. O’Malia August 4, 2011 Public Hearing: Consideration of Final Rules: Swap Data Repositories: Registration Standards, Duties and Core Principles; Implementing the Whistleblower Provisions of Section 23 of the Commodity Exchange Act; Agricultural Swaps Today, we are voting on the third tranche of final rules to implement the Dodd-Frank Act. Before we begin, I would like to join my colleagues in thanking the three teams for their dedication and hard work on these final rules. I intend to support the Swap Data Repository, Agricultural Swaps, and Whistleblower rules, because they reach the right results. I oppose scheduling any further meetings until a comprehensive rulemaking implementation schedule is available for public comment. The Ends Swap Data Repositories: Registration Standards, Duties and Core Principles Pursuant to the Commodity Exchange Act (CEA), the Commission has the responsibility to ensure, among other things, orderly markets and the financial integrity of transactions within such markets. Further, the Commission has the responsibility to avoid systemic risk. In order to fulfill its responsibilities, the Commission must receive accurate information on the markets within its jurisdiction. Once established, swap data repositories (SDRs) will not only provide the Commission (and other domestic and foreign regulators) with comprehensive data on the swaps market, but they will provide the public, for the first time, a reliable means for price discovery. As many of my colleagues and several commenters have aptly noted, the information and records gathered, screened, stored and analyzed by SDRs should inform the Commission’s rule- and policy-making going forward. Because we are currently under rulemaking deadlines that will come to pass months before the first SDRs are even required to be up and running, we must be flexible and cognizant that some of our final rules may ultimately need to be revisited. This should not surprise anyone; Congress knew we did not have data on the swaps market. To quote my esteemed colleague, Commissioner Bart Chilton, we needed this swap data “like yesterday.” 1 Recognizing the importance of SDRs to the regulatory infrastructure of the Dodd-Frank Act, this final rulemaking establishes a robust – yet flexible – approach towards SDR registration. To a greater extent than other Commission actions, this final rulemaking roots SDR regulation in principles, instead of prescriptive requirements. Acknowledging that the Commission has limited experience in regulating entities similar to SDRs, this final rulemaking explicitly states that the Commission may study the effects of its regulations, and may reevaluate such regulations if warranted.2 For these reasons, this final rulemaking – along with its drafters – are to be commended. However, inasmuch as the rulemaking formulates the registration and regulation of SDRs, it does not attempt to resolve some of the most critical issues linked to the role of SDRs in the swaps markets. For example, this rule does not address the fundamental question as to who owns swap data. Between the swap counterparties, the swap execution facility, the derivatives clearing organization or the SDR, it remains unclear as to who owns and has rights to make commercial use of the actual data. I recognize that given the commercial use limitations proscribed in Part 49 of the Commission’s rules, we are seeking to temporarily avoid this issue by speaking in terms of possession, as opposed to ownership, of the data. However, given that old adage that possession is nine-tenths of the law, I am not so confident we are dodging any bullets by refraining to speak on this issue. Additionally, the final rules before us today do not address the role that SDRs will play in the public dissemination of real-time swap data and in determining the appropriate minimum block trade sizes. While I understand that the Commission will address these issues in the finalization of separate rules under Part 43, I cannot help but ask whether the disconnect between the rulemakings will negatively impact the final rules for both Parts 49 and 43.3 Both Commission rulemaking teams have worked at a feverish pace to complete these final rules, and this has certainly caused the development of the rules to occur in silos, even where it is clear that the rules interact. I do not fault the teams, however, because without an implementation or phasing schedule, there is nothing to compel coordination. The teams have marching orders, and I have been more than clear as to how I feel about that. Turning to another topic of particular interest to me, SDRs will be the foundation of our oversight efforts and the foundation of our technology program. The Commission must take the next step, and formulate a technology strategy for: (i) ensuring adequate CFTC connectivity to each SDR; (ii) internally aggregating SDR information with futures information; and (iii) automating surveillance of such information (for both market and credit events). It is my expectation that the finalization of the SDR registration rule today is the end that will get the Commission to focus on the means by refocusing its priorities on expanding our technological capabilities. In June, I respectfully dissented from the FY 2011 spending plan because it continues to concentrate resources on an ever-expanding staff hiring plan that is both fiscally unsustainable and detrimental to the Commission’s already ailing technology programs.4 Moreover, the Commission ignored the explicit Congressional directive establishing a $37.2 million floor for technology spending and instead made $37.2 million the cap. Even more astounding, the Commission completely ignored statutory direction and failed to allocate funding towards highest-priority projects, such as automated surveillance. Regardless of who or what may ultimately become an SDR, the Commission will ultimately retain the responsibility for surveillance and oversight of the swaps market. Implementing the Whistleblower Provisions of Section 23 of the CEA Today’s rules implementing the whistleblower provisions of the CEA represent a good compromise and balance of some very challenging competing interests. The Commission has never before had policies or procedures for the treatment of whistleblowers, let alone has it had the authority to provide awards for their assistance. The Commission faces a steep learning curve, and I expect the Commission to recruit the most qualified individuals to develop this new program and office. I am pleased that the final rules commit the Commission to funding and establishing an Office of Consumer Outreach tasked with the design and execution of initiatives to help consumers protect themselves against fraud and other violations of the CEA. In April, I held a public meeting to begin the dialogue among individuals, organizations and fellow regulators at the forefront of the most successful financial literacy, education and outreach programs to advise the Commission as to how to establish a quality consumer education and outreach program. I was overwhelmed by how little the CFTC had done in this area as compared to our fellow federal financial regulators, especially in the post-financial crisis world where commodities have become a favored investment class with consumers seeking exposure in metals, oil and gas, and currencies. In many cases, consumers are not well informed about the fees, investment strategies or the structure of the investment itself. Consumers are facing more sophisticated, more complex and more diverse financial markets than ever before. While the amount of available information is astounding as compared to any other time, it is also deeply complex. New products are coming out every day, and technological developments are creating more distribution and communication channels than ever before. We’ve got increasing numbers of new participants in our regulated markets, and should help ensure the integrity of our markets by helping participants understand the risks and how to manage them. Agricultural Swaps The final rule before us today regarding Agricultural Swaps is the second in a series of rulemakings related to this topic. Like the one before it, this rulemaking is well done and succinctly provides the public with the certainty it will need to continue to trade agricultural swaps. Unfortunately, because we are yet to publish either a schedule for the consideration of the final rules, or more importantly, a draft implementation schedule, this rule is another example of how unnecessarily confusing the effective date provisions of different inter-related rules can become. We have allowed other rulemakings, like the final rules on Large Trader Reporting for Physical Commodity Swaps,5 to continue to depend on the same Part 35 provisions that this final rule on Agricultural Swaps will remove and replace. We could spare the public a great deal of confusion if we were to consider rules in a more orderly fashion and provide the public with an implementation schedule that makes sense. The Means As I mentioned above, I intend to support the three final rulemakings, because they reach the right ends. However, in rulemaking – as in much else in life – the ends do not always justify the means. As the Commission moves forward, I hope that the Commission begins to think more critically about the final rulemaking process, and whether that process best serves the American people. I hope that the Commission, after honest evaluation, will begin to embrace the transparency and accountability that President Obama himself espouses, rather than the opacity and expediency that have characterized certain rulemakings. Transparency As I have stated time and again, the final rulemaking process currently affords insufficient transparency to market participants and the public. First, despite my repeated requests, we again have failed to set forth an implementation schedule. In our last public hearing, I specifically asked the Commission to publish an implementation schedule at this hearing, so that market participants and the public would have August to comment. Now, even if the Commission sets forth an implementation schedule in early fall, public comment will likely be irrelevant to certain major rulemakings. Specifically, teams for September and October rulemakings may have the discretion to reject public comments on effective or compliance date provisions. I urge the Commission to not permit this situation to come to pass. Therefore, I will not support scheduling further meetings until a comprehensive schedule is produced that allows for public comment. Second, despite my repeated requests, we have not published the final rulemakings for today seven (7) days in advance. Again, members of the public may be sitting in the audience or in front of their computers, watching us speak, without having an opportunity: (i) to review the final rules beforehand, and (ii) to see if our questions address their concerns. I would imagine, from their perspective, that watching Commission hearings would be similar to watching the Ring Cycle without English subtitles. This Commission can do better, and it should do better. Weighing of Costs and Benefits Our economic recovery is weakening. The data is incontrovertible. As the Wall Street Journal reported on Tuesday, American incomes rose only 0.1% in June, in contrast to 0.2% in May. Similarly, American spending decreased 0.2% in June, in contrast to increasing 0.1% in May. As the Wall Street Journal stated: “The report was in line with other evidence of a poorly performing economy, including data last week on gross domestic product. The GDP numbers showed the economy grew little in the first half of 2011. Beset with higher gasoline prices and joblessness, Americans pulled back their spending in the spring.”6 In this economic environment, the Commission should be more conscious than ever in ensuring that the benefits of its rulemakings justify their costs. Cost-benefit analysis should be central to every Commission proposal, whether initial or final. Even if President Obama had not issued two Executive Orders emphasizing the importance of quantitative cost-benefit analyses,7 the Commission should conduct such analyses. Furthermore, the Commission should detail its rationale for choosing to propose and adopt specific prescriptive requirements, especially since principles-based alternatives may be equally effective and less costly.8 Now that we are engaging in final rulemaking, the Commission can no longer ignore the full implication of its rulemakings on Main Street. As I previously emphasized, the outcome of Commission rulemakings may directly impact the food and energy costs of average Americans.9 I am disappointed to say that, during the course of final rulemakings, I have seen indications that the Commission intends to continue with a “one size fits all” approach to cost-benefit analyses,10 instead of embracing its responsibilities under the Executive Orders. For example, I reviewed a version of the rulemaking on the Investment of Customer Funds, which was purported to be final and ready for Commission vote. One major Commission registrant has publicly stated that the costs of that rulemaking may lead it to reconsider its role in derivatives intermediation for customers.11 Nevertheless, the cost-benefit analysis of the rulemaking did not contain one single dollar sign. This clearly indicates that the Commission hasn’t come close to fulfilling our statutory obligation. Fortunately, the Commission has chosen not to vote on Investment of Customer Funds today. That rulemaking is just one example, however, of how we can do better. The Commission should proactively review the cost-benefit analyses of every rulemaking against the Executive Orders, focusing on quantification and more comprehensive examination of less costly alternatives. If the Commission needs to re-propose a rulemaking, then so be it. It is more important to get a rulemaking right than to finish it fast. I would remind the Commission that with respect to cost-benefit analyses, as well as other rulemaking processes, the Commission does not have the last word. As the Inspector General noted in both of his reports, whereas “[t]he Commission’s performance under section 15(a) of the Commodity Exchange Act has never been challenged,” “in recent years the courts have identified weaknesses in the application of economic analysis to regulatory decisions, resulting in rules being sent back to regulators for further consideration.”12 If CFTC rulemakings are subject to litigation, the markets may face years of uncertainty. The time to avoid that outcome – which is satisfactory to no one – is now. Thank you, Mr. Chairman. I will now close by again thanking the teams before us for their hard work, patience and cooperation. Last Updated: August 4, 2011"

CFTC COMMISSIONER CHILTON ON DODD-FRANK RULEMAKING

The following is an excerpt from the CFTC website: “Can’t Get it Outta My Head” Statement Before the CFTC Open Meeting on Dodd-Frank Rulemaking Commissioner Bart Chilton August 4, 2011 I’m pleased to support all three of these final rulemakings today. Perhaps the most talked about of the three is the whistleblower rule. This new provision will be an important tool in the Commissions’ enforcement arsenal. It can give needed incentives for folks—precisely the people we want to hear from, those who have an eye “from the inside” on essential information about nefarious schemes—to come forward, with needed protections. Frankly, this rule wasn’t too hot when we first proposed it. For example, there it didn’t provide for any kind of notification to the whistleblower if the agency actually used the information and successfully prosecuted—we fixed that. The proposal also had a very broad definition of excluded information—we fixed that. It would have incentivized internal reporting, rather than reporting to federal authorities—we fixed that. In short, the public comments we received surely gave us a lot of guidance on this one and I’m happy the process worked. Now, I’m going to put a song in your head that you can whistle all day. One of my favorite television shows when I was a kid was "The Andy Griffith Show." I used to whistle that theme song over and over. I used to whistle it in the tunnels on Capitol Hill. It was a clear and clarion whistle. There was nothing in doubt about it at all. That's the type of whistleblower rules and regulations we need. Clear, consistent and concise—and I think this rule is just that. Now, for those of you that are old enough let me put a second song in your head. In the late 1960s, there was a great song by the Fifth Dimension in the musical Hair called “Let the Sunshine In.” Some of you may remember it. Well, that’s really what SDRs are all about – ‘letting the sunshine in’ to what we used to call these dark markets for swaps trading. I think this is at the heart of the reforms made by the Dodd-Frank Act. One important issue—and I’ve raised this before, specifically with large trader reporting—it has to do with timing, and the inter-relatedness of rules. It’s obvious that the application of this rule, and others to come, will be dependent on our promulgation of definitional rules, and I’ve asked staff to ensure that, in this rule and in all others, we are mindful of this issue to ensure that markets and participants have clarity as to when and how we’re applying rules. Finally, I want to thank the Chairman and the staff for moving these rules forward. A few weeks ago, I said we need to put the pedal down on these rulemakings even though we had to delay some for good reason. Today, we bring three more rules to fruition, so thank you. Last Updated: August 4, 2011"

SEC CHARGED FORMER MARINER ENERGY BOARD MEMBER WITH INSIDER TRADING

The following is an excerpt from the SEC website: Washington, D.C., Aug. 5, 2011 — The Securities and Exchange Commission today charged a former board member at Mariner Energy Inc. and his son with insider trading on confidential information about the impending takeover of the oil and gas company. The SEC alleges that H. Clayton Peterson learned details about Mariner Energy’s upcoming acquisition by Houston-based Apache Corporation during various board meetings and tipped his son Drew Clayton Peterson with the nonpublic information. The son, who was a managing director at a Denver-based investment adviser, then purchased Mariner Energy stock for himself, his relatives, his clients, and a close friend. Drew Peterson also tipped several other close friends who traded on the nonpublic information ahead of the April 2010 acquisition announcement. The insider trading by the Petersons and others generated more than $5.2 million in illicit profits. “Clayton Peterson was entrusted with highly confidential information, and he abused that trust and misused his position and access to make a quick buck for his family,” said Daniel M. Hawke, Chief of the SEC Enforcement Division’s Market Abuse Unit and Director of its Philadelphia Regional Office. “Drew Peterson then gratuitously tipped his friends and traded on this confidential information, leaving a trail of greed for investigators to follow.” Sanjay Wadhwa, Deputy Chief of the SEC Enforcement Division’s Market Abuse Unit and Associate Director of the New York Regional Office, added, “Shareholders rely on company directors to honor their fiduciary responsibilities and not use confidential information for personal gain. Our enforcement action is a forceful reminder to corporate insiders that they cannot exploit their insider status without risking SEC scrutiny.” According to the SEC’s complaint filed in federal court in Manhattan, Clayton Peterson served on Mariner Energy's board of directors from 2006 to 2010 and violated his duty to keep Mariner Energy’s discussions with Apache confidential. Peterson explicitly instructed his son to purchase Mariner Energy stock for a family member based on positive news that the company was about to publicly announce. As the April 15 announcement date neared, Peterson was even clearer in discussions with his son, telling him that the company was going to be acquired and would no longer be a public company within a few days. Based on this inside information, Drew Peterson purchased Mariner Energy stock for his own accounts and others. Following the public announcement, Mariner’s share price rose 42 percent. Drew Peterson and his relatives and clients then sold the Mariner stock that he had accumulated for them. Among the close friends who Drew Peterson had tipped was a hedge fund portfolio manager who reaped approximately $5 million in illegal profits for himself, his hedge funds, and his relatives. The SEC’s complaint charges Clayton Peterson and Drew Peterson 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 on a joint and several basis, 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 thanks the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation for their assistance in this matter. The SEC’s investigation is continuing.”

SEC ANNOUNCES A CONTINUED FREEZE ON ALLEGED INSIDER TRADER FUNDS

The following is an excerpt from the SEC website: August 1, 2011 The Securities and Exchange Commission announced today that it has obtained court orders continuing asset freezes on more than $32 million in assets controlled by three Swiss entities charged with insider trading ahead of a July 11, 2011 public announcement that Swiss-based Lonza Group Ltd. will acquire Connecticut-based Arch Chemicals, Inc. The Commission filed its action on July 15, 2011, in the U.S. District Court for the Southern District of New York, and the court issued a temporary asset freeze that day against defendants Compania International Financiera S.A. (Compania”), Coudree Capital Gestion S.A. (“Coudree”), and Chartwell Asset Management Services (“Chartwell”). The District Court has now entered orders continuing those asset freezes in specific amounts based on the size of the defendants’ profits plus potential penalty amounts. The Court entered an asset freeze order by consent as to defendants Compania and Coudree on July 26, 2011, freezing approximately $14.7 million of their assets. After a hearing as to defendant Chartwell on July 28, 2011, the court entered an order on July 29, 2011, freezing over $18 million of its assets. The Commission’s complaint was filed within days of the alleged insider trading. According to the Commission’s filings, Compania and Coudree purchased more than 687,000 common shares of Arch Chemicals between July 5 and July 8, mostly in accounts based in London, England. During the same time period, Chartwell purchased contracts for difference (“CFDs”) equivalent to 425,300 Arch Chemicals common shares through a brokerage account in London. The Court noted in its opinion and order that CFDs constitute securities as defined by the federal securities laws. Immediately after the acquisition announcement on July 11, the firms began selling the recently-purchased Arch Chemicals common stock and CFDs for millions of dollars in profits. The Commission’s complaint alleges that, at the time the defendants purchased the securities, they are believed to have been in possession of material, non-public information about Lonza’s proposed acquisition of Arch Chemicals. After a hearing on July 28, 2011, before the Honorable Denise L. Cote in the United States District Court for the Southern District of New York, the District Court on July 29, 2011, ordered an asset freeze against Chartwell in the amount of the trading profits ($4,651,995) plus a potential civil penalty of three times that amount ($13,955,985), totaling $18,607,980. The Court further ordered Chartwell to repatriate all assets obtained from the activities described in the Complaint to the United States, and to refrain from destroying any potentially discoverable materials related to the Complaint. In the Court’s Opinion and Order issued on July 29, Judge Cote found that “the discovery collected by the [Commission] … reveals a pattern of trading [by Chartwell] in the context of a tip that is not just consistent with, but also suggestive of, insider trading,” and concluded that the relief sought by the Commission was thus warranted because “there is a likelihood that the [Commission] will succeed on the merits in establishing a 10(b) violation” by Chartwell. Previously, on July 26, 2011, the District Court issued an asset freeze order by consent as to defendants Compania and Coudree. Those defendants have deposited $14,784,006 into a court-controlled bank account pending the outcome of the Commission’s action, including more than $7 million in trading profits, after agreeing to the entry of the asset freeze. The Commission’s complaint charges the defendants with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. In addition to a preliminary injunction, asset freeze and other equitable relief, the complaint seeks a permanent injunction, disgorgement of illegal trading profits plus prejudgment interest, and civil monetary penalties. The Commission’s investigation is continuing. The Commission acknowledges the assistance of the FINRA Office of Fraud Detection and Market Intelligence in its investigation.”