U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23187 / February 3, 2015
Securities and Exchange Commission v. Joel J. Epstein, Civil Action No. 15-cv-0506
SEC Charges Pennsylvania Man with Insider Trading
The Securities and Exchange Commission today charged Joel J. Epstein of Huntingdon Valley, Pennsylvania with insider trading based on material nonpublic information that Epstein misappropriated from his son regarding Nationwide Mutual Insurance Company's merger with Harleysville Group, Inc. On the morning of September 29, 2011, Nationwide and Harleysville, a Pennsylvania-based insurance provider, announced that Nationwide would acquire all publicly-traded shares of Harleysville for $60 per share. At the end of trading on September 29, Harleysville's stock price closed at $58.96, approximately 87% higher than the previous day's close. Epstein has agreed to settle the matter. The settlement is pending final approval by the court.
According to the SEC's complaint filed in the U.S. District Court for the Eastern District of Pennsylvania, Epstein's son learned about the impending Harleysville merger from his long-time girlfriend who was a legal assistant at a law firm that was advising Harleysville on the transaction. On or before September 2, 2011, Epstein's son told him the information he learned from his girlfriend. The complaint further alleges that, between September 2 and September 28, 2011, in breach of a duty of trust and confidence owed to his son, Epstein misappropriated the information that he received from his son and purchased 4,000 shares of Harleysville stock. Epstein sold the shares after the public announcement of the acquisition, realizing ill-gotten gains of $113,503.
The SEC's complaint also alleges that Epstein tipped four people who each purchased 1,000 shares of Harleysville stock between September 21 and September 26, 2011. All four tippees sold their shares on the day of the public announcement, realizing total ill-gotten gains of $123,511.
Epstein has consented to the entry of a final judgment permanently enjoining him from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and requiring him to pay disgorgement of $237,014, the amount of his and his tippees' ill-gotten gains, plus prejudgment interest of $21,599, and a civil penalty of $237,014.
The SEC's investigation, which is continuing, has been conducted by Kelly L. Gibson, Assunta Vivolo and John Rymas of the SEC's Market Abuse Unit along with John V. Donnelly of the Philadelphia Regional Office. The case has been supervised by Daniel M. Hawke, Chief of the Market Abuse Unit, and G. Jeffrey Boujoukos. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of Pennsylvania, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority (FINRA).