U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19518 / January 3, 2006
Securities and Exchange Commission v. Lee David Edelman, Case No. 06 CV 00021 (LBS)(S.D.N.Y.)
SEC BRINGS INSIDER TRADING CHARGES RELATED TO APPLIED MATERIALS’ ACQUISITION OF METRON TECHNOLOGIES
The Securities and Exchange Commission today filed insider trading charges against a former securities trader who bought stock after learning confidential information about a planned corporate acquisition from his live-in girlfriend, an attorney at a major New York law firm who was working on the transaction.
The Commission’s complaint, filed in the United States District Court for the Southern District of New York, charges Lee Edelman, 34, of New York, New York, with insider trading in the stock of Silicon Valley firm Metron Technology shortly before the August 2004 announcement that it was being acquired by San Jose-based Applied Materials, Inc. Edelman sold the shares shortly after the announcement and reaped approximately $23,000 in unlawful profits.
According to the complaint, on or before July 1, 2004, Edelman learned about the acquisition negotiations while living with his girlfriend, an associate at a prominent New York law firm retained by Applied Materials. Edelman was present while the attorney, working in their apartment, reviewed deal documents and discussed the transaction on the phone with colleagues. Edelman used this information to secretly begin acquiring Metron shares beginning on July 1, 2004. Several days later, Edelman’s girlfriend directly told him that she was working on an acquisition of Metron, but cautioned him that he could not use the information for any purpose. Edelman agreed not to misuse the information. Unbeknownst to his girlfriend and despite their agreement, Edelman continued acquiring Metron shares.
The complaint alleges that from July 1 through August 13, 2004, Edelman purchased 12,000 shares of Metron stock. On August 16, Applied Materials announced its plan to acquire Metron, and Metron’s stock price more than doubled. The next day, Edelman sold all his shares for an illegal profit of nearly $23,000.
The Commission action charges Edelman with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission seeks injunctive relief, civil monetary penalties, and disgorgement of ill-gotten gains.
In a related action, the United States Attorney’s Office for the Southern District of New York announced criminal insider trading charges against Edelman.
The Commission acknowledges the assistance of the National Association of Securities Dealers in this matter.