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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23018 / June 10, 2014

Securities and Exchange Commission v. Michael J. Baron, Civil Action No. 14-3699- KSH

SEC Charges Tipper in Insider Trading Ring Involving High School Friends

The Securities and Exchange Commission today filed an enforcement action against Michael J. Baron for participating in an insider trading ring that involved a group of high school friends and others trading in the securities of health care companies. The SEC previously charged seven others involved.

The SEC's complaint alleges that Baron, a former senior editor at a financial publication, received material nonpublic information from his high school friend John Lazorchak, a Celgene Corporation insider, about Celgene's acquisition of Pharmion Corp., which was publicly announced on November 19, 2007. The SEC further alleges that Baron received material nonpublic information from a second high school friend Mark D. Foldy, an insider at Stryker Corporation, about Stryker Corp.'s tender offer to acquire Orthovita, Inc., which was publicly announced on May 16, 2011. In each instance, Baron illegally tipped the information to a relative, who traded on the basis of the tipped information.

The complaint charges Baron with violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The SEC is seeking a final judgment ordering Baron to disgorge the ill-gotten gains of his tippee plus prejudgment interest, and to pay a civil penalty. Subject to approval by the court, Baron has agreed to settle the action by consenting to a final judgment enjoining him from an injunction against future violations and ordering him to pay disgorgement of $6,825 plus prejudgment interest and a penalty of $3,400.

The SEC's investigation was conducted by David W. Snyder and John S. Rymas and supervised by Kelly L. Gibson, who are members of the Market Abuse Unit in the Philadelphia Regional Office. Catherine E. Pappas is the trial counsel on the litigation.

The Commission appreciates the assistance of the U.S. Attorney's Office for the District of New Jersey, the Federal Bureau of Investigation, the Financial Industry Regulatory Authority, and the Options Regulatory Surveillance Authority. For further information about the underlying scheme, see Litigation Release No. 22535 (November 19, 2012).

SEC Complaint

 

http://www.sec.gov/litigation/litreleases/2014/lr23018.htm


Modified: 06/10/2014