U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20577 / May 15, 2008
SEC v. Morris Gad and Nathan Rosenblatt, 07-CV-8385 (GEL) (S.D.N.Y.)
SEC Settles Civil Injunctive Action Against Nathan Rosenblatt
The Commission announced that a final judgment was entered on May 8, 2008, by the United States District Court for the Southern District of New York against Nathan Rosenblatt, a former director of NBTY, Inc., and member of its three-person audit committee. Rosenblatt 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 September 27, 2007, alleges that Rosenblatt tipped his close friend Morris Gad with material, nonpublic information concerning the company's significant revenue and earnings shortfall for the third quarter of 2004, prior the company's public release of its financial results. With this information in hand, Gad sold his entire position of NBTY stock, sold the stock short, purchased put contracts, and sold call contracts through the custodial accounts of his three children prior to NBTY's release of its 2004 third quarter financial results. In so doing, Gad made $399,187.40 in trading profits and losses avoided.
The Commission's complaint charged Rosenblatt and Gad with violating Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rule 10b-5. Gad previously settled with the Commission.
The final judgment against Rosenblatt permanently enjoins Rosenblatt from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act, orders him to pay a civil penalty of $399,187.40, and permanently bars him from acting as an officer or director of any public company.