U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20531 / April 17, 2008
Securities and Exchange Commission v. Sidney Mondschein and UNCI, Inc., United States District Court for the Northern District of California Civil Action No. 07-6178
Final Judgment Entered Against Former San Francisco-Area Stockbroker Concerning Fraudulent Scheme That Violated the Privacy Rights of His Elderly Customers
The Securities and Exchange Commission announced that the U.S. District Court for the Northern District of California entered a final judgment against Sidney Mondschein, a defendant in a civil injunctive action brought by the Commission. The Commission's complaint charged that Mondschein reaped illegal profits by secretly selling the names and other confidential personal information of over 500 of his customers to six different insurance agents. The final judgment, entered on April 14, 2008, permanently enjoins Mondschein from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and from aiding and abetting any violations of Rules 4(a), 5(a), and 10(a)(1) of Regulation S-P. The final judgment also orders Mondschein to disgorge all of his ill-gotten gains of approximately $53,000, plus prejudgment interest of approximately $4,680, and to pay a penalty of $45,000. In a separate related action, the SEC issued an Order barring Mondschein from associating with any broker or dealer, with a right to reapply after five years. Finally, the Court granted the SEC's motion to dismiss relief defendant UNCI from the litigation with prejudice. Accordingly, the pending litigation has now been concluded.
In the District Court action, the Commission's complaint alleged that Mondschein, a former Antioch, California stockbroker, sold his customers' confidential personal information as sales "leads" solely to enable insurance agents to solicit these customers, many of whom had already purchased fixed or equity-indexed annuity products, to buy additional annuity products. The complaint further alleged that Mondschein never disclosed to any of these customers that he intended to sell, and did sell, their confidential personal information to insurance agents, and further alleged that he affirmatively misled his clients as to the nature of his compensation arrangements and relationships with the various insurance agents. According to the complaint, virtually all of Mondschein's customers were senior citizens.
Mondschein consented to the issuance of the final judgment without admitting or denying the allegations in the Commission's complaint, and consented to the Commission's Order without admitting or denying its findings.
For further information, please see Litigation Release Number 20386 (December 6, 2007).