SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16177 / June 7, 1999
Securities and Exchange Commission v. Mitchell Cairo, Civil Action No. 99-6698-CIV-DIMITROULEAS (S.D. Fla., Ft. Lauderdale Div.)
SEC FILES INSIDER TRADING COMPLAINT; DEFENDANT AGREES TO PAY MORE THAN $225,000 IN DISGORGEMENT AND PENALTIES
The Securities and Exchange Commission ("SEC") announced that on June 4, 1999 it filed an insider trading complaint in the United States District Court for the Southern District of Florida against Mitchell Cairo ("Cairo"). The SEC's complaint alleges that in October, 1996, Cairo, a resident of the Washington, D.C. area, violated the federal securities laws when he purchased shares of Vacation Break U.S.A. ("Vacation Break") common stock while in possession of material, non-public information regarding the planned merger of Vacation Break with The Berkley Group, Inc. ("Berkley Group"). Without admitting or denying the allegations in the SEC's complaint, Cairo agreed to disgorge $105,982 in profits plus prejudgment interest of $14,248. He also agreed to pay a civil penalty of $105,982. Additionally, Cairo consented to the entry of a permanent injunction enjoining him from committing future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Specifically, the SEC alleged in its complaint that on October 8, 1996 principals of Vacation Break and the Berkley Group began discussions that led to the announcement on November 27, 1996 of the merger of Vacation Break and Berkley Group. The SEC further alleged that on or about October 28, 1996, Cairo misappropriated from an employee of Vacation Break material nonpublic information relating to the proposed merger, and purchased 15,000 shares of Vacation Break stock while in possession of this information. After the announcement of the planned merger, the price of the stock increased and Cairo sold his shares at a profit.
The SEC thanks the National Association of Securities Dealers, Inc. for the assistance it provided in the investigation leading to this matter.