U.S. SECURITIES AND EXCHANGE COMMISSIONLITIGATION RELEASE NO. 16185 / JUNE 10, 1999
Securities and Exchange Commission v. Lorraine K. Cassano, Civil Action No. 99-CV-3822 (S.D.N.Y. May 26, 1999)
FIFTH DEFENDANT SETTLES SEC'S LOTUS INSIDER TRADING CHARGES BY AGREEING TO PAY MORE THAN $130,000 IN DISGORGEMENT AND PENALTIES
The Securities and Exchange Commission today announced that a final judgment has been entered against Alvin Ira Davis of Staten Island, New York, in a settlement of the Commission's charges that he engaged in illegal insider trading in advance of IBM's takeover of Lotus Development Corporation. Pursuant to the final judgment, Davis is permanently enjoined from further violating the insider trading prohibitions of the federal securities laws and required to pay $55,550 in disgorgement, $19,564 in prejudgment interest and a civil penalty of $55,550. The Commission filed this matter on May 26, 1999, charging a total of twenty-five individuals with insider trading in Lotus call options and common stock. Davis is the fifth defendant to settle. The Commission is continuing to litigate against the remaning twenty defendants.
The Commission alleged in its Complaint that Davis purchased Lotus call options on June 2, 1995, after being tipped by a friend. The Complaint alleges that the friend had left Davis a voice mail message detailing IBM's plan to take over Lotus. According to the complaint, the friend had received that information from Peter G. Mazzone -- the owner of a delicatessan of which Davis' friend was a regular patron. The Complaint further alleged that Mazzone had obtained the information indirectly from an IBM secretary who had misappropriated the information from IBM. Davis' friend also was charged in the case and previously settled, consenting to an injunction and disgorgement and fines also totaling over $130,000.
Davis was enjoined from further violations of Section 14(e) of the Securities Exchange Act of 1934 and Rule 14(e)-3 thereunder. In consenting to the entry of the final judgment, Davis neither admitted nor denied the allegations in the Commission's complaint.
For further information, please see Litigation Release No. 16161 (May 26, 1999).