The Securities and Exchange Commission has announced that on 25 April, 2011, The Honorable Richard J Sullivan of the United States District Court for the Southern District of New York, entered a judgment against Thomas C Hardin in SEC v Lanexa Management LLC and Thomas C Hardin, 10-CV-8599, an insider trading case the SEC filed on November 12, 2010.
The SEC charged Hardin, who was a managing director at the New York-based hedge fund investment advisor Lanexa Management LLC during the relevant time period, with using inside information to trade ahead of the September 28, 2007 announced acquisition of 3Com Corp.
In its complaint, the SEC alleged that Arthur Cutillo and Brien Santarlas, two former attorneys with the international law firm of Ropes & Gray LLP, misappropriated from their law firm material, nonpublic information concerning the acquisition of 3Com, and tipped the inside information, through another attorney, to Zvi Goffer, a former proprietary trader at Schottenfeld Group LLC, in exchange for kickbacks. The SEC further alleged that Goffer tipped the inside information to Gautham Shankar, a fellow proprietary trader at Schottenfeld, who then tipped Hardin. As alleged in the complaint, Hardin then traded in the securities of 3Com on behalf of a Lanexa Management hedge fund.
To settle the SEC’s charges, Hardin consented to the entry of a judgment that: (i) permanently enjoins him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and (ii) orders him to pay disgorgement of USD19,310 plus USD2,426 in prejudgment interest. The judgment further provides that upon motion by the SEC, the Court later will determine issues relating to a civil penalty. In a related SEC administrative proceeding, Hardin consented to the entry of an SEC order barring him from association with any investment adviser, broker, dealer, municipal securities dealer, or transfer agent. Hardin previously pled guilty to charges of securities fraud and conspiracy to commit securities fraud in a related criminal case, United States v. Thomas Hardin, 10-CR-399 (S.D.N.Y.), and is awaiting sentencing.