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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23477 / March 1, 2016

Securities and Exchange Commission v. Zachary Zwerko and David L. Post, Civil Action No. 14-cv-8181-RJS (S.D.N.Y.)

SEC Obtains Final Judgments Against Zwerko and Post

The Securities and Exchange Commission announced today that on March 1, 2016, the Honorable Richard J. Sullivan of the United States District Court for the Southern District of New York entered final judgments on consent against defendants Zachary Zwerko and David L. Post. The final judgment entered against Zwerko imposes a permanent injunction against future violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and orders that Zwerko's obligation to pay disgorgement of $57,000 be offset by the criminal forfeiture judgment imposed against him. The final judgment against Post imposes a permanent injunction against future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and orders that Post's obligation to pay disgorgement of $683,967 be offset by the criminal forfeiture judgment imposed against him.

In its Amended Complaint filed on October 24, 2014, the Commission alleged that Zwerko and Post orchestrated an insider trading scheme that generated over $683,000 by purchasing securities in Post's trading accounts based upon confidential information Zwerko tipped about his employer's pharmaceutical acquisition targets. According to the Amended Complaint, Post and his friend, Zachary Zwerko, used prepaid "burner" cell phones to exchange coded text messages in advance of Post's trading.  They also used a dummy e-mail account they could both access to draft an e-mail message in code and leave it in the draft folder for the other to read and then delete.  In exchange for the illegal tips, Post paid Zwerko $7,000 at a Halloween party following his profitable trading in 2012, and, additionally, gave Zwerko $50,000 in a shoebox when Zwerko visited Post's home after additional insider trading by Post in mid-2014.

The U.S. Attorney's Office for the Southern District of New York announced parallel criminal insider trading cases against Zwerko and Post in October 2014, and subsequently both defendants pled guilty. Zwerko was sentenced to 37 months' imprisonment followed by three years of post-release supervision, ordered to forfeit $644,314 in illegal trading profits, and ordered to pay a $50,000 fine. Post was sentenced to 6 months' imprisonment followed by two years of post-release supervision, ordered to forfeit $737,628 in illegal trading profits, and ordered to pay a $50,000 criminal fine.

The staff in the New York office responsible for the investigation and ongoing litigation includes Dominick D. Barbieri, Neil Hendelman, and Charles D. Riely.  The case has been supervised by Sanjay Wadhwa.

For further information, see Press Release No. 2014-227 (October 14, 2014) and Press Release No. 2014-238 (October 24, 2014).

 

http://www.sec.gov/litigation/litreleases/2016/lr23477.htm


Modified: 03/01/2016