UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16397 / January 3, 2000
Securities and Exchange Commission v. Richard H. Ference and Kevin J. Kirkbride, 99 Civ. 4028 (LMM) (S.D.N.Y.)
SEC SETTLES INSIDER TRADING CHARGES AGAINST TWO FORMER NEW YORK BANKERS
The Securities and Exchange Commission today announced that on December 28 and 29, 1999, the Honorable Lawrence M. McKenna, United States District Judge, Southern District of New York, entered final judgments of permanent injunction and other relief against defendants Kevin J. Kirkbride and Richard H. Ference. These judgments settle a civil action filed by the Commission on June 3, 1999, alleging that for two years Ference and Kirkbride engaged in an insider trading scheme involving over a dozen stocks.
At the time of the unlawful conduct alleged in the Complaint, Ference was a Vice President in the New York office of the Bank of Tokyo-Mitsubishi Trust Company, and Kirkbride was employed in the Investment Banking Division of Smith Barney, Inc., and its successor firm, Salomon Smith Barney, Inc. According to the Complaint, in order to hide their trading, the defendants agreed that Ference would do all of the trading and that he would pay one-third of the profits to Kirkbride, keep one-third for himself, and retain one-third to pay taxes. Thereafter, Kirkbride obtained and disclosed confidential information to Ference concerning at least thirteen transactions contemplated by clients of his employer. Ference then purchased stock of those companies involved in these transactions. In addition, both Ference and Kirkbride did additional insider trading without telling the other. Ference made trades that he did not disclose to Kirkbride, and on at least six occasions, Kirkbride made trades through an account in his own name that he maintained away from his employer, in clear violation of the firm's policies.
In agreeing to settle this matter, the defendants consented to permanent injunctions enjoining them from violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5 and 14e-3 thereunder, without admitting or denying the facts alleged in the Commission's Complaint. Defendant Ference was ordered to pay disgorgement of $1,030,976.59, and a civil penalty of $1,030,976.59, for a total of $2,061,953.18. Defendant Kirkbride was ordered to pay disgorgement of $194,557.77, and a civil penalty of $50,000, for a total of $244,557.77.
In addition, earlier today, the Commission instituted and simultaneously settled a public administrative proceeding, pursuant to Section 15(b) of the Exchange Act, against Kirkbride. The Commission's Order, to which Kirkbride consented, bars him from association with any broker or dealer based on the permanent injunction entered against him.
Defendants Ference and Kirkbride also have pleaded guilty to criminal charges brought by the United States Attorney's Office for the Southern District of New York arising from the same conduct. On December 17, 1999, Ference was sentenced to twenty-one months incarceration for his role in the scheme, and has disgorged his illegal profits of $1,030,976.59. Kirkbride is to be sentenced in January, and has disgorged his illegal profits of $194,557.77. (The disgorgement paid in the criminal proceedings will satisfy the disgorgement ordered in the Commission's civil action.)
The Commission acknowledges and appreciates the assistance provided by the National Association of Securities Dealers Regulation, Inc. in the investigation of this matter. For additional information about this matter, see Litigation Release No. 16173 (June 3, 1999).