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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22299 / March 20, 2012

SEC v. Cutillo et al., Civil Action No. 09-CV-9208 (S.D.N.Y.) (RJS)

Defendant Michael Kimelman Settles SEC Insider Trading Charges

The U.S. Securities and Exchange Commission announced today that on March 16, 2012, The Honorable Richard J. Sullivan of the United States District Court for the Southern District of New York, entered a final judgment against Michael Kimelman in SEC v. Cutillo et al., 09-CV-9208, an insider trading case the SEC filed on November 5, 2009. See Lit. Rel. No. 21283 (Nov. 5, 2009). The SEC charged Kimelman, who was a trader at Lighthouse Financial Group, LLC, with trading on inside information regarding the announced acquisition of 3Com Corp. in September 2007.

In its complaint, the SEC alleged that Arthur Cutillo, a former attorney with the law firm Ropes & Gray LLP, misappropriated from his law firm material nonpublic information concerning, among other things, the potential acquisition of 3Com, and tipped the inside information, through another attorney, to Zvi Goffer, in exchange for kickbacks. The SEC further alleged that Goffer tipped the inside information to a number of individuals, including Kimelman, who traded based on the information, realizing illicit profits of approximately $270,000 in two personal trading accounts.

To settle the SEC’s charges, Kimelman consented to the entry of a final judgment that: (i) permanently enjoins him from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and (ii) orders him to pay disgorgement of $273,255, plus prejudgment interest of $54,582. In a related SEC administrative proceeding, Kimelman consented to the entry of an SEC order barring him from association with any broker or dealer, investment adviser, municipal securities dealer or transfer agent, and barring him from participating in any offering of a penny stock. Kimelman previously was found guilty of securities fraud and conspiracy to commit securities fraud in a related criminal case, United States v. Michael Kimelman, 10-CR-0056 (S.D.N.Y.), and was sentenced to 30 months in prison and ordered to pay a criminal forfeiture of $289,079.

For further information, see Lit. Rel. Nos. 21283 and 21284 (Nov. 5, 2009), 21332 (Dec. 10, 2009), 21470 (Mar. 31, 2010), 21587 (July 7, 2010), 21741 (Nov. 15, 2010), 21826 (Jan. 26, 2011), 21999 (June 14, 2011), 22011 (June 21, 2011), 22021 (June 30, 2011), 22051 (July 20, 2011), 22056 (Aug. 2, 2011), 22078 (Aug. 31, 2011), 22135 (Oct. 20, 2011), 22186 (Dec. 9, 2011) and 22250 (Feb. 2, 2012).

 

 

http://www.sec.gov/litigation/litreleases/2012/lr22299.htm


Modified: 03/20/2012