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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22161 / November 18, 2011

Securities and Exchange Commission v. Mark A. Konyndyk, Civil Action No. 11-CV-02055 (D.D.C.)

FORMER MANAGER AT BIG-FOUR ACCOUNTING FIRM SETTLES INSIDER TRADING CASE

The Securities and Exchange Commission announced today that it has filed and, subject to Court approval, simultaneously settled charges against Mark A. Konyndyk, CPA, for insider trading in advance of a tender offer. The Commission’s complaint alleges that Konyndyk, a former manager in the Transaction Advisory Services Group of Ernst & Young (“E&Y”), learned through his work at E&Y that Activision, Inc. was the target of highly confidential acquisition talks, code-named “Project Sego,” in which Vivendi S.A. was the potential acquirer. In particular, Konyndyk performed due-diligence work on Project Sego for E&Y’s client, Vivendi, billing 36 hours to the engagement. Both before and shortly after his departure from E&Y’s employ on November 2, 2007, including just days before the December 2, 2007, public announcement of the Vivendi-Activision merger, Konyndyk bought Activision out-of-the-money call options with near-term expirations. He sold the options shortly after the public announcement, earning gross profits of $9,725.

Without admitting or denying the allegations, Konyndyk has agreed to settle the Commission’s allegations against him, and the complaint and settlement papers were submitted simultaneously to the Court for its consideration. In particular, Konyndyk signed a consent that provides—subject to approval by the Court—for the entry of a final judgment permanently enjoining him against future violations of the Section 14(e) of the Securities Exchange Act of 1934 and Rule 14e-3 thereunder. The final judgment to which Konyndyk consented would further order that he is liable for disgorgement of $9,725 (comprising all the profits flowing from his own illegal trading) plus $1,789.28 in prejudgment interest thereon as well as a $9,725 civil penalty, but allow him one year to pay the foregoing sums. Additionally, Konyndyk consented, in related administrative proceedings, to the entry of a Commission order that would suspend him, pursuant to Commission Rule of Practice 102(e), from appearing or practicing before the Commission as an accountant, with a right to seek reinstatement after two years. If approved by the Court, this settlement would fully resolve this case.

The Commission acknowledges the assistance of the Options Regulatory Surveillance Authority.

 

 

http://www.sec.gov/litigation/litreleases/2011/lr22161.htm


Modified: 11/18/2011