U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20160 / June 20, 2007
SEC v. Alfred S. Teo, Sr., et al., Civil Action No. CV 04-1815-SDW-MCA (D. N.J.)
Court Enters Final Judgments Against Teren Seto Handelman, John Reier, Phillip Sacks, David Ross and James Ruffolo
The Securities and Exchange Commission announced that on June 19, 2007, Judge Susan D. Wigenton entered a final judgment against defendant Teren Seto Handelman, enjoining her from further violations of Sections 10(b), 13(d), 14(e) and 16(a) of the Securities Exchange Act of 1934 and Rules 12b-20, 13d-1, 13d-2, 14e-3 and 16a-3 thereunder. On June 13, 2007, Judge Wigenton entered final judgments against defendants John Reier, Phillip Sacks and David Ross, and relief defendant James Ruffolo, which enjoined Reier, Sacks and Ross from further violations of Sections 10(b) and 14(e) of the Exchange Act and Rules 10b-5 and 14e-3 thereunder. The judgments ordered: (a) Handelman to disgorge $4,287 plus $1,870.71 in prejudgment interest for a total of $6,157.71, and to pay a $114,287 civil penalty; (b) Reier to disgorge $54,843.25 plus $23,931.99 in prejudgment interest for a total of $78,775.24, and to pay a $54,843.25 civil penalty; (c) Sacks to disgorge $479,747.12 plus $199,739.75 in prejudgment interest for a total of $679,486.87, and to pay a $479,747.12 civil penalty; (d) Ross to disgorge $223,612.50 plus $101,860.47 in prejudgment interest for a total of $325,472.97, and to pay a $223,612.50 civil penalty; and (e) Ross and Ruffolo, on a joint and several basis, to disgorge $112,000 plus $51,018.50 in prejudgment interest for a total of $163,018.50. The defendants and relief defendant consented to the entry of these judgments without admitting or denying the allegations in the Commission's complaint.
The Commission's complaint, filed on April 22, 2004, charged Handelman, Reier, Sacks and Ross with engaging in insider trading in the securities of Musicland Stores Corporation before Musicland's December 7, 2000 announcement that it would be acquired by another company by tender offer. The Commission's complaint alleges that Alfred S. Teo, Sr., a major Musicland shareholder, learned about the proposed tender offer for Musicland, and then tipped Handelman, Reier, Sacks, Ross and others with this information. Thereafter, Handelman, Reier, Sacks and Ross purchased Musicland stock, and Ross purchased Musicland stock for Ruffolo, and as a result, they received illicit insider trading profits. The Commission's complaint also alleges that Handelman, as trustee of the MAAA Trust, a trust for Teo's children, filed false and misleading Schedule 13D and other filings regarding its Musicland stock holdings and omitted to make filings when she had a duty to do so.
The Commission action against the remaining defendants continues.
See also: L.R. 18673 (April 22, 2004)