U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23687 / November 9, 2016
Securities and Exchange Commission v. Herbert K. Sudfeld, Civil Action No. 2:15-cv-03939-CJR (Eastern District of Pennsylvania)
Judgment Entered Against Defendant in SEC Insider Trading Action
The Securities and Exchange Commission announced today the resolution of an enforcement action filed by the Commission on July 16, 2015 in federal district court in Philadelphia, Pennsylvania, against defendant, former attorney Herbert K. Sudfeld, of Doylestown, Pennsylvania, and his wife, relief defendant Mary Jo Sudfeld. The Court entered judgment by consent against Herbert Sudfeld on August 18, 2016, ordering him to pay $91,747 in disgorgement and prejudgment interest and enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission voluntarily dismissed the claim against relief defendant Mary Jo Sudfeld on November 9, 2016.
The SEC's complaint alleged that Herbert Sudfeld illegally traded in advance of the 2011 announcement of a $760 million merger of Harleysville Group, Inc. and Nationwide Mutual Insurance Company, which sent the price of Harleysville stock up 87%. Sudfeld purchased 3,000 shares of Harleysville stock the day before the announcement, using an account in his own name and one in his wife's name. At the time, Sudfeld was a real estate partner at a Philadelphia-area law firm that advised Harleysville on the merger. Sudfeld, who was not involved in the merger negotiations, learned that the announcement was imminent from a conversation between an attorney working on the transaction and their shared legal assistant. On the day the merger was announced, Sudfeld sold all of the shares he had purchased, realizing approximately $79,000 in illegal profits. The Commission named Mrs. Sudfeld as a relief defendant based on the ill-gotten gains realized in the account in her name.
Previously, in a parallel criminal case arising out of the same facts alleged in the SEC's complaint, a jury convicted Herbert Sudfeld of insider trading along with three counts of making a false statement. The court sentenced him to six months imprisonment followed by three years of supervised release and 150 hours of community service.
The SEC thanks the U.S. Attorney's Office for the Eastern District of Pennsylvania and the Federal Bureau of Investigations for its efforts in prosecuting the case.
For further information, see Litigation Release Nos. 23305 (July 16, 2015), 23461(February 8, 2016), 23602 (July 26, 2016).