U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21470 / March 31, 2010
SEC v. Arthur J. Cutillo, et al., Civil Action No. 09-CV-9208 (S.D.N.Y.) (RJS)
Schottenfeld Group LLC to Pay $1.2 Million to Settle Insider Trading Charges
The Commission announced today that on March 30, 2010, The Honorable Richard J. Sullivan of the United States District Court for the Southern District of New York, entered a final judgment against Schottenfeld Group LLC in SEC v. Arthur J. Cutillo, et al., 09-CV-9208 (S.D.N.Y.), an insider trading case the Commission filed on November 5, 2009. Schottenfeld Group, a New York limited liability company and registered broker-dealer based in New York, New York, consented to the entry of the final judgment.
The Commission's complaint charged Schottenfeld Group with violations of the antifraud provisions of the federal securities laws. The Commission alleged that, in 2007, Schottenfeld Group proprietary traders Zvi Goffer, David Plate, and Gautham Shankar illegally traded on material, nonpublic information concerning the proposed acquisitions of Avaya Inc., 3Com Corp., and/or Axcan Pharma, Inc. in Schottenfeld Group accounts.
Schottenfeld Group consented to the entry of a final judgment: (i) permanently enjoining it from future violations of Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5; (ii) ordering it to pay disgorgement of $742,415, representing its share of the illicit trading profits, together with prejudgment interest thereon in the amount of $96,199.17; and (iii) ordering it to pay a civil penalty of $371,207.50. In addition, as part of the settlement, Schottenfeld Group has agreed to cooperate in the Commission's investigation and to retain an independent consultant to review its controls and compliance mechanisms.
See also Litigation Release No. 21283 (November 5, 2009).