UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17893 / December 12, 2002
COMMISSION CHARGES RAND E. SHAPIRO AND JOHN D. WEIL WITH INSIDER TRADING
Securities and Exchange Commission v. Rand E. Shapiro and John D. Weil, Civil Action No. 02-CV-1470 (M.D. Fla.)
The Securities and Exchange Commission ("Commission") announced the filing, on December 10, 2002, of a complaint in the United States District Court for the Middle District of Florida, alleging insider trading in the securities of Kaye Group, Inc. ("Kaye Group") by Rand E. Shapiro, of Orlando, Florida, and John D. Weil, of St. Louis, Missouri. These two individuals purchased the securities of Kaye Group in advance of a January 20, 2001 announcement of the company's acquisition by Hub International Limited ("Hub"). Neither Shapiro nor Weil was an insider of Kaye Group, and each purchased Kaye Group stock after speaking with a director of Kaye Group and learning of the possibility that Kaye Group would be purchased by another company. The complaint seeks permanent injunctions for violations of the antifraud provisions of the securities laws, disgorgement and civil penalties. Simultaneously with the filing of the complaint, and without admitting or denying the Commission's allegations, the defendants consented to the entry of Final Judgments permanently enjoining them from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Final Judgments also require that Shapiro disgorge $35,804 plus prejudgment interest, and pay a civil penalty of $35,804, and that Weil disgorge $46,712 plus prejudgment interest, and pay a civil penalty of $46,712.
Kaye Group, which was headquartered in New York, New York, was a holding company which, through its subsidiaries, engaged in insurance brokerage, underwriting and related activities. Its shares were listed on the NASDAQ National Market until June 28, 2001, when it was acquired by Hub, an international insurance brokerage holding company headquartered in Ontario, Canada and Chicago, Illinois.
The Commission's complaint alleges that Shapiro spoke frequently with a Kaye Group director and shareholder who was a close friend and business associate seeking personal advice from Shapiro. Weil, who owned 10 percent of the stock of Kaye Group, spoke with another Kaye Group director in December 2000, about the future of the company, during which time Weil was told about the possible purchase. Shapiro and Weil, knowing that the information concerning the acquisition was provided in the belief that each would keep the information confidential, each unlawfully misappropriated and used the information for his own benefit.
The complaint further alleges that, while in possession of material nonpublic information, Shapiro purchased 5,800 shares of Kaye Group stock on four separate occasions in November and December 2000, and realized profits of $35,804 from his unlawful trading. Weil purchased 7,400 shares of Kaye Group on four different occasions in his future wife's brokerage accounts and realized profits of $46,712 from his unlawful trading.