SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17501 / May 2, 2002
Securities and Exchange Commission v. John Freeman, James Cooper, Benton Erskine, Anthony Seminara, Norman Lehrman, Linda Karlsen, Timothy Siemers, Norman Grossman, Lawrence Schwartz, Michael Akva, Robert Fricker, Richard Zelman, Bradley Burke, Benjamin Cooper, Chad L. Conner, Deon Benson, Gordon K. Allen, Jr., Jon Geibel, and William H. Borders II, 00 Civ. 1963 (VM) (Southern District of New York)
SEC SETTLES CLAIMS INVOLVING INSIDER TRADING AGAINST THREE DEFENDANTS
The Securities and Exchange Commission ("Commission") today announced that Honorable Victor Marrero of the United States District Court for the Southern District of New York entered individual Final Judgments of permanent injunction and other relief against defendant Norman Lehrman ("Lehrman") of Tallman, New York on April 24, 2002, and against defendants Linda Karlsen ("Karlsen") of Brooklyn, New York, and Timothy Siemers ("Siemers") of New York, New York on April 25, 2002. These judgments settle the Commission's claims against these three defendants in a civil action filed by the Commission on March 14, 2000, alleging that from 1997 through January 2000, these three defendants and others engaged in a widespread insider trading scheme that produced over $8 million in illegal profits from trading in the securities of 23 public companies.
The Commission's Complaint alleged that John Freeman, a temporary word-processing employee at Goldman Sachs & Co., Inc. and later Credit Suisse First Boston, tipped a number of defendants about merger and acquisition transactions involving clients of those investment banking firms. The Complaint alleged that Freeman tipped his co-workers at Philip Morris, Linda Karlsen and Norman Lehrman. Karlsen purchased securities in advance of eleven transactions. Lehrman purchased securities in advance of four transactions. Timothy Siemers, a friend of Freeman, purchased securities in advance of eighteen transactions.
Without admitting or denying the allegations in the Complaint, the defendants consented to the entry of Final Judgments that permanently enjoin them from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. Karlsen was ordered to pay disgorgement in the amount of $192,633 with pre-judgment interest in the amount of $72,474, but payment was waived for the amount exceeding $190,000 based upon her sworn Statement of Financial Condition. Lehrman was ordered to pay disgorgement in the amount of $110,026 with pre-judgment interest in the amount of $30,552, but payment of the full amount was waived based upon his sworn Statement of Financial Condition. Siemers was ordered to pay disgorgement in the amount of $322,459 with pre-judgment interest in the amount of $121,318, but payment of the full amount was waived based upon his sworn Statement of Financial Condition. Civil penalties were not imposed against defendants Karlsen, Lehrman, and Siemers based upon each defendant's sworn Statement of Financial Condition. Lehrman and Siemers both previously pleaded guilty in parallel criminal proceedings filed by the United States Attorney's Office for the Southern District of New York. A jury found Karlsen guilty after a criminal trial.
See also: L.R. 16469 (March 14, 2000) and L.R. 17267 (December 12, 2001)