U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21472 / April 1, 2010
Securities and Exchange Commission v. Morando Berrettini and Ralph J. Pirtle, Civil Action No. 10-CV-01614 (N.D. Ill. March 31, 2010)
SEC Charges Former Corporate Director of Real Estate and Real Estate Broker For Insider Trading
On March 31, 2010, the Securities and Exchange Commission filed a first amended complaint against Ralph Pirtle, the former Director of Real Estate for Philips Electronics North America, Inc., a wholly-owned subsidiary of Royal Philips, N.V. (“Philips”), and his friend and business associate, Morando Berrettini, for insider trading in the securities of Lifeline Systems, Inc., Invacare, Inc., and Intermagnetics Corporation. The original complaint was filed on March 11, 2010. According to the first amended complaint, Philips considered acquiring each of these companies between December 2005 and June 2006. On each occasion Pirtle, a resident of Mount Pleasant, South Carolina, allegedly tipped Berrettini of Lake Forest, Illinois, about Philips’ plans, and Berrettini purchased shares in the three companies. According to the first amended complaint, Berrettini earned an aggregate profit of $240,622 on his trades in Lifeline and Intermagnetics common stock when Philips announced it was acquiring those companies.
The first amended complaint alleges that Pirtle received material, nonpublic information about Philips’ acquisition plans and provided this information to Berrettini in breach of his fiduciary duties to his employer. The first amended complaint also alleges that Berrettini, as a long-time real estate broker and consultant to Philips, knew or reasonably should have known that Pirtle gave him the information in breach of Pirtle’s duties, and that trading on the information would violate Berrettini’s own obligations to Philips. According to the first amended complaint, Pirtle and Berrettini had other side-dealings over an extended period of time, unbeknownst to and undisclosed to Philips. The other side-dealings allegedly included a series of transactions in which Berrettini purchased goods and services for Pirtle through cashier’s checks totaling approximately $226,000. The first amended complaint alleges that Pirtle and Berrettini violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission is seeking permanent injunctions, disgorgement of ill-gotten gains, including prejudgment interest, and civil penalties from each defendant.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority (formerly, the NASD) in this matter.
See Also: SEC Complaint