U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23986 / November 14, 2017
Securities and Exchange Commission v. Susan L. Ellerin and Edward D. Blumstein, No. 1:17-cv-12240 (D. Mass.)
SEC Charges Boston-Area Consultant and Friend with Insider Trading
On November 14, 2017, the Securities and Exchange Commission charged Boston-area marketing and management consultant Susan Ellerin and her friend, Edward Blumstein, with insider trading that exploited confidential information Ellerin obtained while performing consulting services for the subsidiary of a major private equity firm. Ellerin and Blumstein have agreed to settle the SEC's charges and will pay combined disgorgement and penalties of over $176,000.
The SEC alleges that in 2015 and 2016, Ellerin and Blumstein traded in the stock of Florida-based ADT Corporation in advance of an announcement that ADT would be acquired by New York-based private equity firm Apollo Global Management, LLC. On news of the acquisition, ADT's stock price increased more than 50%.
According to the SEC's complaint, Ellerin had been hired as a consultant by Protection One, a company owned by Apollo, and learned of Apollo's potential acquisition of ADT from an employee of Protection One. The complaint alleges that between October 2015 and February 2016, Ellerin purchased ADT stock while in possession of this material, nonpublic information, and tipped Blumstein, who also purchased ADT stock based on the confidential information provided by Ellerin. Together, Ellerin and Blumstein realized over $86,000 in ill-gotten profits as a result of their illicit trades.
The SEC's charges are set forth in a civil complaint filed in the U.S. District Court for the District of Massachusetts. Without admitting or denying the SEC's charges, Ellerin and Blumstein have agreed to settle the case against them, subject to approval by the District Court. As part of the settlement, Ellerin and Blumstein have agreed to entry of a permanent injunction against further violations of Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. The settlement also calls for Ellerin to pay disgorgement of $15,054, the amount of her ill-gotten gains, plus prejudgment interest of $770, and a civil penalty of $15,054. Blumstein would be required to pay disgorgement of $71,070, the amount of his ill-gotten gains, plus prejudgment interest of $3,400, and a civil penalty of $71,070.
The SEC's investigation was conducted by Michael J. Vito, Deena R. Bernstein, and Celia D. Moore of the Boston Regional Office.