U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20044 / March 16, 2007
SEC v. Barry Hertz, Civil Action No. 05-2848 (E.D.N.Y.)(CBA)(KAM)
SEC Settles Civil Injunctive Action Against Barry Hertz, Chairman and CEO of Track Data Corporation
The Commission announced that a final judgment was entered today by the United States District Court for the Eastern District of New York against Barry Hertz, the chairman, chief executive officer, and majority shareholder of Track Data Corporation, a financial services company, in a previously-filed action alleging insider trading in the shares of Track Data. Hertz consented to the entry of final judgment, without admitting or denying the allegations of the Commission's complaint, except as to jurisdiction.
The Commission's Complaint
The complaint, which was filed June 14, 2005, alleges that Hertz, while in possession of material, nonpublic information concerning Track Data's earnings for the second and third quarters of 2003, sold Track Data stock through several accounts over which he had trading authority prior to the company's negative earnings announcements. At the time that he sold the shares, Hertz was also subject to Track Data's quarterly "black-out" periods prohibiting trading in Track Data stock prior to the company's public disclosure of its financial results. The complaint also alleges that Hertz tipped several of his relatives who sold small amounts of Track Data stock at or around the same time he did. Hertz also purchased shares of Track Data stock in one of the accounts prior to the positive news of a first time dividend issuance, about which he had prior knowledge. The Complaint further alleges that following the disclosure of Track Data's financial results for the 2003 second and third quarters, the price of Track Data stock dropped 21% and 14.2%, respectively. Following the news of the issuance of a company dividend, the price of the stock increased by 19%.
The Settlement
The final judgment against Hertz, age 57, of Brooklyn, permanently enjoins Hertz from violating antifraud provisions of the federal securities laws, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933, orders him to disgorge $61,657.33, representing profits earned and losses avoided in trading Track Data shares, imposes a civil penalty in the amount of $61,657.33, and bars him from serving as an officer or director of a public corporation for a period of two years.
In connection with the settlement, Hertz has also consented to the institution of settled administrative proceedings pursuant to Section 15(b) of the Securities Exchange Act of 1934, which will bar Hertz from association with any broker or dealer for two years. The Order will be based on the permanent injunction contained in the final judgment.
For further information, see Litigation Release No. 19268 (June 14, 2005).