SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17485 / April 24, 2002
SECURITIES AND EXCHANGE COMMISSION v. HUGO SALVADOR VILLA MANZO AND MULTINVESTMENTS, INC., Civil Action No. 02CV 1766 (S.D.N.Y.)(filed March 6, 2002)
Chairman of MultiValores Grupo Financiero, S.A. de C.V. is Barred from the Securities Industry
On March 11, 2002, the U.S. District Court for the Southern District of New York entered a final judgment against Hugo Salvador Villa Manzo ("Villa") based upon charges of insider trading. Villa is the Chairman and part-owner of MultiValores Grupo Financiero, S.A. de C.V., a Mexican public company that indirectly owns Multinvestments, Inc. ("Multinvestments"), a U.S. broker-dealer. In 1999, Villa was the Chairman of Multinvestments. In its Complaint filed on March 6, 2002, the Commission alleged that Villa was tipped by Jose Luis Ballesteros, a director of Nalco who has since died. The Complaint specifically alleged that Jose Luis Ballesteros violated his fiduciary duties to Nalco by providing Villa with material, nonpublic information about the proposed acquisition by Suez Lyonnaise des Eaux, a French company. In response to this tip, Villa instructed one of his senior colleagues at Multinvestments to buy Nalco stock for Multinvestments' proprietary account. Pursuant to Villa's instructions, Multinvestments, through its proprietary account, purchased 50,000 Nalco shares for $2,015,625. In purchasing Nalco shares, Multinvestments used margin privileges and also used the maximum amount available in its proprietary account without violating the firm's net capital requirements. As a result of these transactions, unlawful profits totaling $558,750 were realized.
Without admitting or denying the Commission's allegations, Villa consented to the entry of the final judgment, which permanently enjoins him from violating the antifraud provisions contained within Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 promulgated thereunder. The Court also ordered Villa and Multinvestments to pay $1,503,471.83, representing disgorgement of $558,750, prejudgment interest of $106,596.83, and a civil penalty of $838,125.
Today, based on the entry of the Court's injunction, the Commission instituted settled administrative proceedings against Villa. Without admitting or denying the Commission's findings, Villa consented to the entry of the Commission's Order, which bars him from associating with any broker, dealer, or investment adviser. In the Matter of Hugo Salvador Villa Manzo, Administrative Proceeding File No. 3-10763; Securities Exchange Act of 1934 Release No. 45806 (April 24, 2002); Investment Advisers Act of 1940 Release No. 2031 (April 24, 2002). See also Litigation Release No. 17395 (March 6, 2002).