In the Matter of Jay Lapine, Esq.
On June 8, 2010, the Commission issued an Order Instituting Public Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings and Imposing Remedial Sanctions (Order) against Jay Lapine, Esq., the former General Counsel of HBO and Company (HBOC) and of the Information Technology unit of its successor, McKesson Corporation (then known as McKesson HBOC, Inc.). The Order finds that in a complaint filed in the United States District Court for the Northern District of California, the Commission alleged that Lapine participated in two major transactions that were part of a larger fraudulent scheme by HBOC and McKesson HBOC executives to inflate software revenue in violation of Generally Accepted Accounting Principles by using concealed side letters and backdated contracts from January 1998 through the first quarter of 1999. The complaint further alleged that Lapine falsified documents and circumvented internal accounting controls and that he aided and abetted these violations by HBOC and McKesson HBOC as well as aided and abetted the companies' failure to maintain accurate books and records and HBOC's filing of materially false periodic reports with the Commission.
On March 1, 2010, the United States District Court for the Northern District of California entered a final judgment by consent against Lapine, permanently enjoining him from violating Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 12b-20, 13a-13 and 13b2-1 thereunder, and from aiding and abetting the violations of Sections 13(a), 13(b)(5) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-13 and 13b2-1 thereunder. Lapine was also ordered to pay a $60,000 civil penalty and was prohibited for a period of five years from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. S 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. S 78o(d)].
Based on the above, the Order suspends Lapine from appearing or practicing before the Commission as an attorney for five years. Lapine consented to the issuance of the Order without admitting or denying any of the findings except that he admitted to the Commission's jurisdiction over him and the subject matter of its proceedings, as well as to his practice as an attorney, the filing of the Commission's complaint against him and the entry of the final judgment. (Rel. 34-62238; File No. 3-13926)
In the Matter of Pequot Capital Management, Inc. and Arthur J. Samberg
On June 8, 2010, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Sections 203(e) and 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (the Order) against Pequot Capital Management, Inc. (Pequot), a registered investment adviser, and Arthur J. Samberg (Samberg), Pequot's chairman and chief executive officer.
The Order finds that on June 2, 2010, a final judgment was entered by consent against Pequot and Samberg, permanently enjoining them from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Pequot Capital Management, Inc., et al., Civil Action Number 3:10-cv-00831-CFD, in the United States District Court for the District of Connecticut. Pequot and Samberg were also ordered to pay $15,142,020 in disgorgement on a joint and several basis, together with prejudgment interest thereon in the amount of $2,696,448. In addition, Pequot and Samberg were each ordered to pay a $5 million civil money penalty.
The Commission's complaint alleged that, while in possession of material, nonpublic information and prior to the public announcement by Microsoft Corporation (Microsoft) concerning its earnings for the quarter ended March 31, 2001, Samberg purchased numerous Microsoft options on behalf of funds he managed for Pequot and recommended that a friend purchase Microsoft securities. According to the complaint, Pequot's and Samberg's trading in Microsoft securities resulted in total gains of approximately $14,769,960, and Samberg's friend had gains of $372,060.
Based on the above, the Order censured Pequot and barred Samberg from association with any investment adviser, provided that for a period of up to fifteen months Samberg can participate in certain advisory activities aimed solely at winding down Pequot. For further information see http://www.sec.gov/news/press/2010/2010-88.htm. (Rel. IA-3035; File No. 3-13928)
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