U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21086 / June 16, 2009
SEC v. Mitchel S. Guttenberg, Erik R. Franklin, David M. Tavdy, Mark E. Lenowitz, Robert D. Babcock, Andrew A. Srebnik, Ken Okada, David A. Glass, Marc R. Jurman, Randi E. Collotta, Christopher K. Collotta, Q Capital Investment Partners, LP, DSJ International Resources Ltd. (d/b/a Chelsey Capital), and Jasper Capital LLC, C.A. No. 07 CV 1774 (S.D.N.Y) (PKC)
Former UBS Executive and Hedge Fund Operator Settle SEC Insider Trading Charges
The Securities and Exchange Commission announced today that on June 2, 2009, the Honorable P. Kevin Castel, United States District Judge for the Southern District of New York, entered final judgments against Mitchel S. Guttenberg and DSJ International Resources Ltd. (d/b/a Chelsey Capital) in SEC v. Guttenberg, et al., C.A. No. 07 CV 1774 (S.D.N.Y.), an insider trading case the SEC filed on March 1, 2007. The SEC's complaint alleged that from 2001 through 2006, Guttenberg, an executive director in the equity research department of UBS Securities LLC ("UBS"), illegally tipped material, nonpublic information concerning upcoming UBS analyst upgrades and downgrades to two Wall Street traders, Erik R. Franklin and David M. Tavdy, in exchange for sharing in the illicit profits from their trading on that information. The SEC further alleged that both traders had downstream tippees, and that Franklin tipped, among others, Chelsey Capital, which also traded on the information. Without admitting or denying the allegations in the complaint, both Guttenberg and Chelsey Capital settled the SEC's insider trading charges.
Guttenberg consented to the entry of a final judgment which (i) permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933 ("Securities Act"); and (ii) orders him to pay disgorgement of $15,810,000. In a related administrative proceeding, Guttenberg consented to the entry of a Commission order barring him from future association with any broker, dealer, or investment adviser. In a parallel criminal case, Guttenberg previously pled guilty to charges of securities fraud and conspiracy to commit securities fraud, and was sentenced to 78 months in prison. U.S. v. Mitchel Guttenberg and David Tavdy, No. 1:07-CR-141 (S.D.N.Y.).
Chelsey Capital consented to the entry of a final judgment which (i) permanently enjoins him from violating Section 10(b) of the Exchange Act, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act; and (ii) orders it to pay $8,901,440, which consists of disgorgement of $3,637,548, prejudgment interest thereon of $1,626,344, and a civil penalty of $3,637,548.
The SEC acknowledges the assistance and cooperation of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.