Jeffery J. Temple and Benedict M. Pastro

U.S. Securities and Exchange Commission

Litigation Release No. 21765 / December 7, 2010

Securities and Exchange Commission v. Jeffery J. Temple and Benedict M. Pastro, Case No. 10-CV-1058 (D. Del., December 7, 2010)


The Securities and Exchange Commission today charged a former information technology (IT) manager at a prominent Delaware law firm and his brother-in-law with insider trading on confidential information about impending mergers and acquisitions by the law firm's clients.

The SEC alleges that Jeffery J. Temple, a former Information Systems and Security Manager at a Wilmington, Del.-based law firm, accessed material nonpublic information in the course of his employment and then traded in advance of at least 22 merger and acquisition public announcements involving 20 companies that retained his former employer as counsel in some capacity.  Temple also tipped his brother-in-law, Benedict M. Pastro, who traded in concert with Temple in advance of twelve public announcements.  The pair reaped over $182,000 in illegal profits during their insider trading scheme.  Temple was terminated from his position on Oct. 11, 2010 once his illegal scheme was uncovered.

According to the SEC's complaint filed in the U.S. District Court for the District of Delaware, the scheme began in 2009 as Temple used his IT position to access nonpublic information about impending deals involving law firm clients.  Temple, who lives in Newark, Delaware, corresponded with his online brokerage firm using his law firm e-mail address.  Electronic login records for Temple's brokerage account reflect that he often placed trades from work.  Frequent telephone calls around the time of the trades indicate that Temple closely coordinated his trading with Pastro, who also lives in Newark.

Among the many deals mentioned in the Complaint, the SEC alleges, for example, that Temple and Pastro conducted insider trading based on confidential information Temple accessed about an impending merger and acquisition involving DynCorp International, Inc.  Temple's law firm was hired on Oct. 6, 2009 to act as special Delaware outside counsel to Dyncorp's Board of Directors in connection with its possible acquisition by Cerberus Capital Management L.P.  Temple and Pastro purchased stock and call options in DynCorp shortly before an Apr. 12, 2010 public merger and acquisition announcement.  Immediately following the announcement, Temple and Pastro sold their positions for illicit trading profits of more than $34,000.

The SEC further alleges that Temple and Pastro also traded on nonpublic information that Temple obtained about an impending deal between Facet Biotech Corporation and Abbott Laboratories, Inc.  Temple's law firm was retained as counsel to Facet on or before Aug. 25, 2009, in connection with Abbott Labs's proposed tender offer to Facet.  Temple and Pastro bought stock and call options only days before the Mar. 9, 2010 public announcement that Facet agreed to be acquired by Abbott Labs.  Pastro and Temple sold all of their positions immediately after the announcement for combined trading profits of more than $23,000. 

The SEC also alleges that Temple was trading on material nonpublic information obtained during the course of his employment and profiting from his scheme as recently as September.    

Finally, the SEC alleges that Temple and Pastro violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder.  The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.

The SEC's investigation is continuing.  The SEC is bringing this action in coordination with the United States Attorney's Office for the District of Delaware.  The SEC also appreciates the assistance of the Options Regulatory Surveillance Authority, the Financial Industry Regulatory Authority and The Federal Bureau of Investigation.

See Also: SEC Complaint