U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23602 / July 26, 2016
Securities and Exchange Commission v. Herbert K. Sudfeld, Jr., No. 2:15-cv-03939 (E.D. Pa. filed July 16, 2015)
United States v. Herbert K. Sudfeld, Jr., Criminal Action No. 2:15-cr-00330 (E.D. Pa. filed July 16, 2015)
Former Attorney Sentenced to Six Months in Prison for Insider Trading
On July 22, 2016, Judge Cynthia M. Rufe of the U.S. District Court for the Eastern District of Pennsylvania sentenced former attorney Herbert K. Sudfeld, Jr. of Doylestown, Pennsylvania, to six months imprisonment followed by three years of supervised release and 150 hours of community service. In February 2016, Sudfeld was convicted of insider trading and making false statements to federal agents.
The criminal charges against Sudfeld arose out of the same conduct alleged by the SEC in a civil securities fraud action filed on July 16, 2015. The SEC's complaint alleged that Sudfeld illegally traded in advance of the 2011 announcement of a $760 million merger of Harleysville Group, Inc. and Nationwide Mutual Insurance Company. At the time, according to the complaint, Sudfeld was a real estate partner at a Philadelphia-area law firm that advised Harleysville on the merger. The complaint alleges that Sudfeld, who was not involved in the merger negotiations, learned that the announcement was imminent and, on the day the merger was announced and the price of Harleysville stock increased 87 percent, Sudfeld sold all of the shares he had purchased, realizing approximately $79,000 in illegal profits.
The SEC's action against Sudfeld, which was stayed pending resolution of the criminal charges against him, seeks an injunction against Sudfeld from further violating the federal securities laws, disgorgement and prejudgment interest of allegedly unlawful trading profits , and civil penalties. The SEC's complaint also names Sudfeld's wife as a relief defendant for the purpose of recovering alleged insider trading profits in her brokerage account through trades conducted by Sudfeld.
The SEC thanks the U.S. Attorney's Office for the Eastern District of Pennsylvania and the Federal Bureau of Investigation for their efforts in prosecuting the case.
For further information, see Litigation Release Nos. 23305 (July 16, 2015) and 23461 (Feb. 8, 2016).