U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18873 / September 9, 2004
U.S. Securities and Exchange Commission v. Fiore J. Gallucci, Ronald A. Manzo, and Gary B. Taffet, No. 04 CV 04493 (SAS) (S.D.N.Y. filed June 16, 2004).
SEC SETTLES INSIDER TRADING CHARGES FILED AGAINST HUSBAND OF LAW FIRM SECRETARY AND AGAINST NEW JERSEY BUSINESSMAN
Commission Also Bars Husband of Law Firm Secretary from Association with Any Broker or Dealer
The U.S. Securities and Exchange Commission ("Commission") today announced that, on September 3, 2004, the U.S. District Court for the Southern District of New York entered a settled Final Judgment as to Defendant Fiore J. Gallucci and a settled Final Judgment as to Defendant Ronald A. Manzo, in the Commission's previously filed civil injunctive insider trading action, U.S. Securities and Exchange Commission v. Fiore J. Gallucci, Ronald A. Manzo, and Gary B. Taffet, No. 04 CV 04493 (SAS) (S.D.N.Y. filed June 16, 2004). The Final Judgment against Gallucci permanently enjoins him from further violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b 5 and 14e 3 thereunder. The Final Judgment against Manzo permanently enjoins him from further violations of Sections 10(b) and 14(e) of the Exchange Act and Rules 10b 5 and 14e 3 thereunder and orders Manzo to pay disgorgement of the gains from his unlawful trading, in an amount of $995,971, together with prejudgment interest thereon in the amount of $399,713. Gallucci and Manzo each consented to the entry of the Final Judgments, without admitting or denying the allegations in the Commission's Complaint in its civil injunctive action, except as to jurisdiction.
The Commission's Complaint alleges that the three defendants tipped and traded on the basis of material, nonpublic information regarding the identities of target companies in contemplated mergers and acquisitions. The Complaint alleges that, at various times during 1998 and 1999, Gallucci, a bond salesman, learned the identities of these target companies from his wife, who was the secretary for a partner at the law firm of Skadden Arps Slate Meagher & Flom. The Complaint further alleges that Gallucci himself did not trade on the basis of the information, but that he misappropriated the information from his wife by disclosing it and its source to his long-time friend, Manzo. The Complaint also alleges that Manzo purchased securities of the target companies and that Manzo tipped others, including his friend and associate, Gary B. Taffet, who was an owner of a company that provided insurance advice to local government entities in New Jersey and who had strong political ties in the state. Both Gallucci and Manzo have pleaded guilty to related federal felony charges brought by the U.S. Attorney's Office for the Southern District of New York and are currently awaiting sentencing.
The Commission today also announced the institution of a settled administrative proceeding pursuant to Section 15(b) of the Exchange Act, barring Gallucci from associating with any broker or dealer, on the basis of the injunction entered against him in the Commission's civil action. Gallucci was associated with Aubrey G. Lanston & Co., Inc., a registered broker-dealer, at the time of his insider tipping. Gallucci consented, without admitting or denying the Commission's substantive findings, to institution of the Commission's Order in its administrative proceeding.
See also Litigation Release No. 18746 (June 16, 2004); Exchange Act Release No. 34-50334 (September 9, 2004).