UNITED STATES DISTRICT COURT
COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF
Plaintiff Securities and Exchange Commission ("Commission") alleges as follows:
1. The Commission brings this action to restrain and enjoin Defendant Robert Bartzoff ("Bartzoff") from continuing to violate the antifraud provisions of the federal securities laws. Bartzoff purchased the publicly traded securities of Plasma Therm, Inc. ("PTIS") while in possession of material, non-public information regarding a tender offer, which information he had misappropriated from his wife, an insider of PTIS. Between August 13 and December 20, 1999, the date on which PTIS announced its acquisition by tender offer, Bartzoff accumulated 45,950 shares of PTIS and earned a profit of $291,200.63. The Commission seeks disgorgement of all ill-gotten gains plus prejudgment interest thereon, civil money penalties, and a permanent injunction against further violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. §§ 78j(b) and 78n(e)] and Rules 10b-5 and 14e-3(a) [17 C.F.R. 240.10b-5 and 240.14e-3(a)] thereunder.
2. Bartzoff, age 48, has been married to Katherine Bartzoff ("K. Bartzoff") since 1996. During the period of the misconduct, August through December 1999 (the "relevant period"), Bartzoff resided with K. Bartzoff in Tierra Verde, Pinellas County, Florida. During the relevant period Bartzoff worked out of his home office as a software sales manager for a national software company.
JURISDICTION AND VENUE
3. This Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and 27 of the Exchange Act, 15 U.S.C. §§ 78u(d), 78u(e) and 78aa.
4. Defendant's acts and practices which constitute violations of the Exchange Act occurred within the Middle District of Florida, where Defendant resided during the relevant period.
5. Defendant, directly and indirectly, made use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce, and the mails, or the facilities of a national securities exchange, in connection with the acts, practices, and courses of conduct complained of herein.
6. PTIS was a Florida-based company which produced plasma processing equipment used in film etching and deposition. From June 1996 until its delisting after PTIS was acquired in March 2000 by Oerlikon-Buhrle Holding, AG ("OBH"), Plasma Therm common stock was quoted on the NASDAQ.
7. In July 1999, PTIS, through its investment banker retained for that purpose, solicited interest from potential acquirers. At least three serious suitors had emerged by early August. By late September, PTIS had received offers to exchange all outstanding shares of PTIS for shares of one competitor/suitor, valued at $7.25-$7.50 for each PTIS share. PTIS was trading in the $4-5.00 range at the time. Due diligence continued, and the three bidders repeatedly increased their respective offers until OBH made a $12.50/share, all cash, offering for all outstanding shares of PTIS in mid-December. On December 20, 1999, OBH and PTIS's respective boards of directors voted to approve the acquisition and issued a joint announcement of the tender offer.
K. Bartzoff, an Insider, Had Access to Material,
Non-Public Information Regarding a Proposed Tender Offer
8. K. Bartzoff worked as a paralegal and assistant to PTIS's corporate secretary/chief financial officer ("CFO") from October 1998 through January 31, 2000. K. Bartzoff regularly prepared and sent, as well as received and filed, confidential correspondence for the corporate secretary/CFO. She also attended PTIS board of directors' and executive staff meetings and prepared the official minutes of those meetings.
9. K. Bartzoff was a corporate insider with possession of material, non-public information regarding PTIS.
10. By late July 1999, K. Bartzoff knew that PTIS had retained an investment banker to actively explore business combinations and that at least two of PTIS's competitors had signed confidentiality agreements. By August 3, she knew that a third suitor, OBH, signed a confidentiality agreement with PTIS.
11. Between July and December 20, 1999, the date the tender offer was announced, K. Bartzoff had regular communications with PTIS's officers, directors, investment bankers, outside counsel and proposed suitors regarding the proposed tender offer and its evolving terms. K. Bartzoff knew that the information regarding the proposed merger was material and confidential until such time as a merger would be announced to the public.
Bartzoff Misappropriates Inside Information from His Wife
12. Upon information and belief, K. Bartzoff reposed special trust and confidence in her husband by entrusting him with total control over her own financial affairs and obligations. Bartzoff reviewed and paid all household bills with monies in their joint banking account, prepared their joint mortgage applications, prepared and filed their joint tax returns, represented their interests in a civil lawsuit, and handled all aspects of the sale of their condominium. In all of these matters, K. Bartzoff relied on Bartzoff to act in her best interest, and Bartzoff accepted his wife's trust and confidence.
13. On or before August 13, 1999, Bartzoff became aware of PTIS's merger negotiations from K. Bartzoff. Bartzoff gave no indication that he would not continue to preserve her confidence and promote her best interests and K. Bartzoff believed unequivocally that he would do so. Accordingly, Bartzoff was under a duty to refrain from disclosing or trading on the material, non-public information.
14. Notwithstanding Bartzoff's duty to K. Bartzoff to refrain from trading on the material, inside information she had confided in him, Bartzoff began accumulating shares of PTIS without the knowledge of K. Bartzoff.
15. On August 13, 1999, while in possession of material, non-public information regarding the proposed tender offer, Bartzoff purchased 5,000 shares of PTIS at $2.94/share. Over the next four months he steadily accumulated more shares of PTIS. By the time the tender offer at $12.50/share was announced on December 20, 1999, Bartzoff owned 45,950 shares of PTIS.
16. Bartzoff sold some PTIS shares immediately after the announcement of the acquisition and tendered the remaining shares in the tender offer. In total, Bartzoff profited $291,200.63 on his PTIS investment.
DEFENDANT VIOLATED SECTION 10(b)
OF THE EXCHANGE ACT AND RULE 10b-5 THEREUNDER
17. The Commission realleges and repeats the allegations set forth in Paragraphs 1 through 16 of this Complaint as if fully stated herein.
18. From August 13, 1999 through December 20, 1999, Defendant, directly or indirectly, by use of the means or instrumentalities of interstate commerce or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of securities, as described herein, has willfully, knowingly or recklessly:
a) employed devices, schemes or artifices to defraud;
b) made untrue statements of material fact and omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and/or
c) engaged in acts, practices and courses of business which have operated, are now operating and will operate as a fraud upon the purchasers of such securities.
19. By reason of the foregoing, Defendant, directly or indirectly, has violated and, unless enjoined, will continue to violate Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240. 10b-5, thereunder.
DEFENDANT VIOLATED SECTION 14(e)
OF THE EXCHANGE ACT AND RULE 14e-3(a) THEREUNDER
20. The Commission realleges and repeats the allegations set forth in Paragraphs 1 through 16 of this Complaint as if fully stated herein.
21. From August 13, 1999 through December 20, 1999, Defendant, directly or indirectly, by use of the means or instrumentalities of interstate commerce or of the mails, in connection with a tender offer, or request or invitation for tender offers, has:
a. made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and/or
b. engaged in fraudulent, deceptive or manipulative acts or practices.
22. By reason of the foregoing, Defendant, directly or indirectly, has violated and, unless enjoined, will continue to violate Section 14(e) of the Exchange Act, 15 U.S.C. § 78n(e), and Rule 14e-3(a), 17 C.F.R. § 240. 14e-3(a), thereunder.
WHEREFORE, the Commission respectfully requests that the Court:
Permanent Injunctive Relief
Issue a Permanent Injunction, restraining and enjoining Defendant Bartzoff, his agents, servants, employees, attorneys, and all persons in active concert or participation with him, from violating Sections 10(b) and 14(e) of the Exchange Act, 15 U.S.C. §§ 78j(b) and 78n(e), and Rules 10b-5 and 14e-3(a), 17 C.F.R. §§ 240.10b-5 and 240.14e-3(a), thereunder.
Issue an Order requiring Defendant to disgorge all ill-gotten profits or proceeds that he received, directly or indirectly, as a result of the acts and courses of conduct complained of herein, with prejudgment interest.
Issue an Order directing Defendant Bartzoff to pay civil money penalties pursuant to Section 21A of the Exchange Act, 15 U.S.C. § 78u-1.
Grant such other and further relief as may be necessary and appropriate.
Retention of Jurisdiction
Further, the Commission respectfully requests that the Court retain jurisdiction over this action in order to implement and carry out the terms of all orders and decrees that may hereby be entered, or to entertain any suitable application or motion by the Commission for additional relief within the jurisdiction of this Court.