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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21233 / October 1, 2009

SEC, APPELLEE, v. MITCHELL DRUCKER AND RONALD DRUCKER, DEFENDANT- APPELLANTS, AND WILLIAM MINERVA, RELIEF DEFENDANT-APPELLANT, UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT, APPEAL NO. 08-0942-CV (September 21, 2009)

SEC v. MITCHELL DRUCKER AND RONALD DRUCKER, DEFENDANTS, AND WILLIAM MINERVA, RELIEF DEFENDANT 06 Civ. 1644 (SDNY) (CM)

SECOND CIRCUIT COURT OF APPEALS AFFIRMS JURY VERDICT AND REMEDIES IMPOSED AGAINST ATTORNEY AND HIS FATHER FOR INSIDER TRADING

On September 21, 2009, the United States Court of Appeals for the Second Circuit affirmed a jury verdict finding Mitchell S. Drucker, an attorney and former associate general counsel at NBTY, Inc. ("NBTY"), a nutritional supplements manufacturer and retailer, and his father, Ronald Drucker, liable for violating the antifraud provisions of the federal securities and affirmed the remedies imposed by the federal district court. The Court of Appeals also affirmed the District Court's order of disgorgement against relief defendant William Minerva ("Minerva").

The Commission had charged that, while Mitchell Drucker was a lawyer at NBTY, and had learned that NBTY was about to announce lower than expected quarterly earnings, he and his father, a former New York City police detective, sold their entire holdings of NBTY stock just before the negative announcement. Collectively, the defendants avoided $197,243 in losses by selling in advance of the announcement.

On December 3, 2007, a federal jury in the United States District Court for the Southern District of New York found Mitchell Drucker and Ronald Drucker violated the antifraud provisions of the federal securities laws by committing insider trading. The jury found that defendants Mitchell Drucker and Ronald Drucker each violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder ("the antifraud provisions").

On December 26, 2007, Judge Colleen McMahon of the United States District Court for the Southern District of New York, entered final judgments against Mitchell Drucker, Ronald Drucker and Minerva. The judgment against defendant Mitchell Drucker permanently enjoined him from violating the antifraud provisions, and barred him from serving as an officer and director of any public company. The judgment also ordered defendant Mitchell Drucker to pay disgorgement and prejudgment interest totaling $201,146, to pay, and be jointly and severally liable with his father, defendant Ronald Drucker for, disgorgement and prejudgment interest totaling $74,411, and to pay, and be jointly and severally liable with his friend, relief defendant Minerva for, disgorgement and prejudgment interest totaling $11,577. The judgment ordered Mitchell Drucker to pay a civil penalty of $394,486, representing two times the combined ill-gotten gains obtained by defendants Mitchell Drucker and Ronald Drucker, and relief defendant Minerva.

The judgment against defendant Ronald Drucker permanently enjoined him from violating the antifraud provisions, and ordered him to pay, and be jointly and severally liable with his son, defendant Mitchell Drucker for, disgorgement and prejudgment interest totaling $74,411.

The judgment against relief defendant William Minerva ordered him to pay, and be jointly and severally liable with his friend, defendant Mitchell Drucker for, disgorgement and prejudgment interest totaling $11,577.

For further information see Litigation Releases Nos. 19587, 20385 and 20419

 

http://www.sec.gov/litigation/litreleases/2009/lr21233.htm


Modified: 10/01/2009