U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23461 / February 8, 2016
Securities and Exchange Commission v. Herbert K. Sudfeld, Civil Action No. 2:15-cv-03939-MAK (Eastern District of Pennsylvania, Complaint filed July 16, 2015)
Defendant in SEC Insider Trading Action Found Guilty by Federal Jury in Philadelphia in a Related Criminal Case
The Securities and Exchange Commission announced today that on February 5, 2016, a jury in federal court in Philadelphia returned a guilty verdict against Doylestown, Pennsylvania attorney Herbert K. Sudfeld ("Sudfeld") in a criminal trial prosecuted by the U.S. Attorney for the Eastern District of Pennsylvania. The jury convicted Sudfeld of insider trading along with three counts of making a false statement. U.S. District Court Judge Cynthia M. Rufe has not yet set a date for sentencing.
The Commission previously charged Sudfeld with insider trading in a civil action filed July 16, 2015. The criminal case is based on the same conduct underlying the SEC's action. The SEC's complaint alleged that Sudfeld illegally traded in advance of the 2011 announcement of a $760 million merger of Harleysville Group, Inc. and Nationwide Mutual Insurance Company, which sent the price of Harleysville stock up 87%. Sudfeld purchased 3,000 shares of Harleysville the day before the announcement. At the time, Sudfeld was a real estate partner at a law firm in Philadelphia that advised Harleysville on the merger. Sudfeld, who was not involved in the merger negotiations, learned that the announcement was imminent from a conversation between an attorney working on the transaction and their shared legal assistant. In the criminal trial, the government proved that Sudfeld took this information and used it to purchase Harleysville stock in his and his wife's account. On the day the merger was announced, Sudfeld sold all of the shares he had purchased, realizing approximately $79,000 in illegal profits.
The SEC's action, which remains pending, seeks an injunction against Sudfeld from further violations of the charged provisions of the federal securities laws, disgorgement of ill-gotten gains, and civil penalties. The SEC's complaint also names Sudfeld's wife, Mary Jo Sudfeld, as a relief defendant for the purpose of recovering insider trading profits in her brokerage account.
The SEC thanks the U.S. Attorney's Office for the Eastern District of Pennsylvania and the Federal Bureau of Investigation for its efforts in prosecuting the case.
For further information, see Litigation Release No. 23305 (July 16, 2015).