U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22186 / December 9, 2011
SEC v. Cutillo et al., Civil Action No. 09-CV-9208 (S.D.N.Y.) (RJS)
Former Schottenfeld Proprietary Trader Zvi Goffer Settles SEC Insider Trading Charges
The Securities and Exchange Commission announced today that on December 9, 2011, The Honorable Richard J. Sullivan of the United States District Court for the Southern District of New York, entered a judgment against Zvi Goffer in SEC v. Cutillo et al., 09-CV-9208, an insider trading case the SEC filed on November 5, 2009. The SEC charged Goffer, who was a registered representative and a proprietary trader at the broker-dealer Schottenfeld Group, LLC, with tipping and trading on inside information related to corporate acquisitions, including the announced acquisition of Avaya Inc. in June 2007 and the announced acquisition of 3Com Corp. in September 2007.
In its complaint, the SEC alleged that Arthur Cutillo, a former attorney with the law firm Ropes & Gray LLP, misappropriated from his law firm material, nonpublic information concerning, among other things, the potential acquisitions of 3Com and Avaya, and tipped the inside information, through another attorney, to Goffer, in exchange for kickbacks. The SEC further alleged that Goffer traded based on this information, and tipped it to a network of downstream tippees, who also traded and profited based on the inside information. As alleged in the complaint, Goffer went to great lengths to conceal his illicit conduct, including distributing disposable cell phones to both his sources and his tippees.
To settle the SEC’s charges, Goffer consented to the entry of a judgment that: (i) permanently enjoins him from 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 $1,014,758, plus prejudgment interest of $231,304. In a related SEC administrative proceeding, Goffer consented to the entry of an SEC order barring him from association with any broker or dealer, investment adviser, municipal securities dealer or transfer agent, and barring him from participating in any offering of a penny stock. Goffer previously was found guilty of securities fraud and conspiracy to commit securities fraud in a related criminal case, United States v. Zvi Goffer, 10-CR-0056 (S.D.N.Y.), and was sentenced to a ten year prison term and ordered to pay criminal forfeiture of $10,022,931.
The SEC also announced today the entry of a judgment against Goffer in a separate case alleging insider trading in connection with other securities. See SEC v. Galleon, LP, et al., No. 09-CIV-8811 (S.D.N.Y.) (JSR).
For further information, see Litigation Release Nos. 21283 and 21284 (Nov. 5, 2009), 21332 (Dec. 10, 2009), 21470 (Mar. 31, 2010), 21587 (July 7, 2010), 21741 (Nov. 15, 2010), 21826 (Jan. 26, 2011), 21999 (June 14, 2011), 22011 (June 21, 2011), 22051 (July 20, 2011), 22056 (Aug. 2, 2011), 22078 (Aug. 31, 2011), and 22135 (Oct. 20, 2011).