U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20153 / June 13, 2007
SEC v. Joseph Galamb, Civil Action No. 07-cv-2743(D.N.J.)
The Securities and Exchange Commission ("Commission") today announced the filing of a civil action in the United States District Court for the District of New Jersey against Joseph Galamb, of Marlboro, New Jersey, for engaging in unlawful insider trading in the securities of Hudson United Bancorp ("Hudson United"). The complaint alleges that the defendant, a former Hudson United Assistant Vice President, purchased securities of Hudson United on the basis of material, nonpublic information concerning an impending acquisition of Hudson United by TD Banknorth, Inc. Without admitting or denying the allegations of the complaint, Galamb has consented to the entry of a final judgment permanently enjoining him from engaging in the violations set forth below, and ordering him to pay disgorgement of $7,125, plus prejudgment interest of $412, and a civil penalty of $7,125.
The Commission's complaint alleges that Hudson United was a bank holding company headquartered in Mahwah, New Jersey, operating 204 bank branches throughout several states. Sometime in June 2005, Galamb learned that Hudson United was in the process of being sold or acquired. At or around that time, another Hudson United employee, with whom Galamb had a close working relationship and who worked in Hudson United's corporate offices, told Galamb that, based on certain activity she had witnessed, she believed the bank was going to be sold. The employee told Galamb that there had been a "flurry of activity" that, from her experience, was consistent with acquisition and merger negotiations.
The complaint further alleges that on July 7, 2005, in violation of his fiduciary duties to Hudson United and its shareholders, Galamb purchased 1,450 shares of Hudson United stock, paying $36.50 per share. Prior to the market opening on July 12, 2005, TD Banknorth announced that it would acquire Hudson United in a cash and stock transaction valued at approximately $42.78 per Hudson United share. On July 12, 2005, Hudson United's stock closed at $41.64 per share, an 11 percent increase over the previous day. On that same day, after the announcement, Galamb sold his shares, realizing an unlawful profit of $7,125.
The complaint alleges that by his conduct, Galamb violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks a permanent injunction, disgorgement together with prejudgment interest, and a civil penalty against Galamb.