SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16178 / June 7, 1999
Securities and Exchange Commission v. Jay Marcus and Dana Marcus, No. 97 Civ. 0462 (E.D.N.Y.)
Former President of Pharmaceutical Drug Manufacturer Settles Insider Trading Allegations With the Commission
The Securities and Exchange Commission announced the filing on June 4, 1999, of a Final Judgment of Permanent Injunction By Consent against defendant Jay Marcus ("Marcus") and relief defendant Dana Marcus ("D. Marcus") in a case alleging that Marcus traded in the stock of Halsey Drug Company, Inc. ("Halsey") while in the possession of material, non-public information about Halsey and that he signed materially false and misleading annual reports. The Final Judgment, to which Marcus and D. Marcus consented without admitting or denying the allegations of the Amended Complaint, orders that Marcus: (1) be permanently enjoined from committing violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder; (2) as a controlling person pursuant to Section 20(a) of the Exchange Act, be permanently enjoined from violating Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder; and (3) that Marcus and D. Marcus pay disgorgement of $278,294.19 plus prejudgment interest thereon, which represents the amount alleged by the Commission to be Marcus' losses avoided from the conduct alleged in the Amended Complaint. The Final Judgment provides however, that payment of disgorgement and prejudgment interest is being waived except for $60,000.00, and that no civil penalty is imposed, based upon the Marcuses' demonstrated inability to pay. In addition, the Final Judgment provides, pursuant to Section 20(e) of the Securities Act and Section 21(d)(2) of the Exchange Act, that Marcus be barred for a period of ten years from the entry of the Final Judgment from serving as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act.
The Commission's Amended Complaint, filed on December 8, 1997, alleged as follows:
From at least January 1990 through March 1993, Halsey manufactured and sold adulterated generic drugs. In February 1992, Marcus, who was then the president and chief executive officer of Halsey, sold 70,000 shares of Halsey common stock while in possession of material, non-public information regarding Halsey's manufacture and sale of adulterated drug products. Marcus transferred some of the proceeds of this sale to D. Marcus by giving her a condominium and jewelry purchased with the proceeds. Marcus reviewed and signed materially false and misleading annual reports that Halsey filed with the Commission for Halsey's fiscal years ended December 31, 1990 and 1991. After Halsey announced on March 30, 1993 that a variety of problems relating to the drug adulteration had resulted in significantly lower earnings than expected, the price of Halsey stock dropped significantly.
For more information see Litigation Release No. R15230 (January 29, 1997).