U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21285 / November 6, 2009
Securities and Exchange Commission v. Nicos Achilleas Stephanou et al., Civil Action No. 09 CV 1043 (S.D.N.Y.)
SEC SETTLES INSIDER TRADING CHARGES AGAINST WALL STREET PROFESSIONAL AND TIPPEE
The Securities and Exchange Commission announced that final judgments were entered by the United States District Court for the Southern District of New York against Nicos Achilleas Stephanou, a former Director of Mergers and Acquisitions at UBS Investment Bank, and his former classmate, George Paparrizos, in a previously filed action charging those individuals and five other defendants with insider trading. The final judgments, entered on September 23, 2009, enjoin both Nicos Stephanou and George Paparrizos from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. In addition, the final judgment against Nicos Stephanou orders him to pay disgorgement of $461,893, together with prejudgment interest of $77,175. The final judgment against George Paparrizos orders him to pay disgorgement of $24,617, together with prejudgment interest in the amount of $3,900, and a civil penalty of $24,617. Nicos Stephanou and George Paparrizos consented to the entry of the final judgments against them without admitting or denying the allegations in the Commission's complaint. In addition, on May 6, 2009, Nicos Stephanou pled guilty to seven felony counts, including six counts of conspiracy to commit securities fraud and one count of securities fraud and on April 21, 2009, George Paparrizos pled guilty to two felony counts, including one count of conspiracy to commit securities fraud and one count of securities fraud.
The Commission's complaint, filed February 5, 2009, alleges that from at least November 2005 through December 2006, Nicos Stephanou tipped several individuals with material nonpublic information regarding acquisitions of at least three companies, Albertson's Inc. ("ABS"), ElkCorp. ("ELK"), and National Health Investors, Inc. ("NHI"). According to the complaint, Nicos Stephanou obtained material nonpublic information concerning the ABS and ELK acquisitions from his employer, UBS, which had been retained to serve as the financial advisor for ELK and the acquiring entity of ABS. The complaint further alleges that Nicos Stephanou obtained material nonpublic information regarding the NHI acquisitions from his friend, Ramesh Chakrapani, a former Managing Director at Blackstone Advisory Services, L.P. NHI had retained Blackstone as their financial advisory services firm and Chakrapani was a member of the team assigned to advise NHI on the potential acquisition. The complaint alleges Nicos Stephanou tipped George Paparrizos, Michael Koulouroudis, a close friend of Nicos Stephanou, and Joseph Contorinis, a portfolio manager for the Jefferies Paragon Fund and friend and former colleague of Nicos Stephanou, who then traded in the securities of the acquired companies based on the nonpublic information. The trading generated a combined total of over $8 million in illegal profits and losses avoided.
In addition, the Commission also issued today an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions against Nicos Stephanou barring him from associating with any broker or dealer. Nicos Stephanou consented to the issuance of the Order without admitting or denying any of the findings except as to the Commission's jurisdiction over him and the subject matter of the proceedings, and the findings contained in Sections III.2 and III.4 of the Order, which are admitted.
For further information, see Litigation Release Number 20884 (February 5, 2009) (SEC Charges Wall Street Professionals and Others with Insider Trading).