U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21638 / September 1, 2010
Securities and Exchange Commission v. James W. Self Jr. and Stephen R. Goldfield, Civil Action No. 10-CV-4430-ER (E.D.P.A.)
SEC CHARGES PHARMACEUTICAL COMPANY INSIDER AND FORMER HEDGE FUND MANAGER FOR INSIDER TRADING, RESULTING IN APPROXIMATELY $14 MILLION IN PROFITS
The Securities and Exchange Commission announced that it has filed a complaint in the United States District Court for the Eastern District of Pennsylvania against James W. Self, Jr. (Self), an Executive Director of Business Development at a pharmaceutical company located in New Jersey (the Company), and Stephen R. Goldfield (Goldfield), a former hedge fund manager, for engaging in unlawful insider trading in advance of the April 23, 2007 announcement that AstraZeneca would acquire MedImmune, Inc. (MEDI). The Commission's complaint alleges that Self tipped Goldfield, a friend and former business school classmate, with material nonpublic information regarding the MEDI acquisition and that Goldfield unlawfully purchased 17,000 MEDI call options and 255,000 shares of MEDI stock while in possession of the material nonpublic information provided to him by Self. Goldfield realized actual profits of approximately $14 million from his unlawful trading.
The Commission's complaint further alleges that Self had been assigned to the Company's team that was tasked with evaluating a potential acquisition of MEDI, and learned nonpublic information about the potential MEDI acquisition. The Complaint alleges that Self knew that he owed a duty to the Company to maintain the confidence of all nonpublic information he learned during the course of his employment and to abstain from disclosing any such information to others.
The Complaint alleges that during a meeting with Goldfield on or about March 12 or 13, 2007, Self, in violation of his duty to the Company, told Goldfield that he had been assigned to work on the potential MEDI acquisition and showed Goldfield a confidential deal sheet, which described MEDI and the procedure and planned timing for the subsequent confidential auction process. The Complaint further alleges that, following this meeting, Self continued to provide nonpublic information to Goldfield on the status of the potential acquisition. From March 15, 2007 continuing through April 20, 2007, Goldfield traded while in possession of the material nonpublic information that Self provided to him. Goldfield closed out his MEDI position entirely within the four business days immediately following the April 23, 2007 announcement about the acquisition, and realized $13,978,752 in profits from his unlawful trading. By May 31, 2007, Goldfield lost all of the profits he had earned trading MEDI through aggressively trading index options.
Without admitting or denying the Commission's allegations, Self has agreed to settle the case against him. Self has consented to a permanent injunction against future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. In addition, Self has consented to an order imposing a civil penalty of $50,000, based on Self's sworn statements in his statement of financial condition and other materials provided to the staff.
Without admitting or denying the Commission's allegations, Goldfield has also agreed to settle the case against him. Goldfield has consented to a permanent injunction against future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. In addition, Goldfield has consented to an order for disgorgement in the amount of $13,978,752, along with prejudgment interest of $2,666,275, for a total of $16,645,027, provided that payment of all but $600,000 is waived, based on Goldfield's sworn statements in his statement of financial condition and other materials provided to the staff.
See Also: SEC Complaint