The Honourable Jed S Rakoff, United States District Judge, United States District Court for the Southern District of New York, has entered a Final Judgment on consent as to James Fleishman in the SEC’s insider trading case, entitled SEC v Mark Anthony Longoria, et al, 11-CV-0753 (SDNY) (JSR).
This case alleges insider trading by ten individuals and one investment adviser entity, all of whom are consultants, employees, or clients of the so-called “expert network” firm, Primary Global Research LLC (PGR).
The SEC filed its Complaint on 3 February, 2011, charging two PGR employees and four consultants with insider trading for illegally tipping hedge funds and other investors. On 8 February, 2011, the SEC filed an Amended Complaint, charging a New York-based hedge fund and four hedge fund portfolio managers and analysts who illegally traded on confidential information obtained from technology company employees moonlighting as expert network consultants. The scheme netted more than USD30 million from trades based on material, nonpublic information about such companies as Advanced Micro Devices, Seagate Technology and Western Digital. The charges were the first against traders in the SEC's ongoing investigation of insider trading involving expert networks.
The SEC alleged that Fleishman was a vice president of sales at PGR who facilitated the transfer of material nonpublic information from PGR consultants to PGR clients and, in certain instances, acted as a conduit by receiving material nonpublic information from PGR consultants and passing that information directly to PGR clients.
The Final Judgment entered against Fleishman permanently enjoins him from violations of Section 10(b) of the Exchange Act of 1934 (Exchange Act) and Exchange Act Rule 10b-5 and orders him liable for disgorgement of ill-gotten gains of USD49,150, which is to be deemed satisfied by the order of forfeiture of USD49,150 entered against Fleishman in a parallel criminal action against him. In the parallel criminal action, Fleishman was also sentenced to a 30-month term of imprisonment, which he is currently serving. In light of this, the Commission did not seek a civil penalty from Fleishman in this settlement.
Separately, Fleishman has also consented to the entry of an order by the SEC instituting administrative proceedings pursuant to Section 15(b) of the Exchange Act barring Fleishman from association with any investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognised statistical rating organisation, and from participating in any offering of a penny stock.