UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16187 / June 15, 1999
Securities and Exchange Commission v. Brian Patrick Burns, Jr., Albert Joseph Pandolfi and Stanley Alvin Pandolfi, Civil Action No. 99CV1546 (GK) (D.D.C.)
SEC CHARGES COMPANY INSIDER AND TWO FRIENDS WITH INSIDER TRADING
The Securities and Exchange Commission today filed a complaint in the United States District Court for the District of Columbia charging Brian Patrick Burns, Jr. and two longtime friends, Albert Joseph Pandolfi and Stanley Alvin Pandolfi, with insider trading in advance of an April 1998 public announcement that Neurex Corp., a California biopharmaceutical company, would be acquired by Elan Corporation, plc. The complaint alleges that Burns, then an in-house attorney with Neurex, learned of the possible acquisition of his company on the morning of April 27, 1998. Later that day, Burns tipped Albert Pandolfi about the acquisition and recommended that Albert’s father, Stanley Pandolfi, purchase Neurex stock. Both of the Pandolfis purchased Neurex common stock and call options on April 27, 1998. The Neurex acquisition was publicly announced before the opening of the market on April 29, 1998. As a result of the announcement, the price of Neurex’s stock opened on April 29 at $ 28.50, up $8.75 from the previous day’s close. Both Albert and Stanley Pandolfi sold their Neurex securities later that day, realizing total illicit profits of $83,663. Burns did not purchase any Neurex securities prior to the announcement. The Commission alleges that as a result of the conduct described above, the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, and is seeking permanent injunctions, disgorgement, and monetary penalties against the defendants.
All three defendants have consented to entry of final judgments permanently enjoining them from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, without admitting or denying the facts alleged in the complaint. Pursuant to the terms of their settlement agreements, Albert and Stanley Pandolfi will pay disgorgement in the amounts of $15,000 and $25,000 respectively, and based upon their demonstrated financial inability to pay additional amounts, $43,663 in disgorgement will be waived and no civil penalties will be imposed. Burns has agreed to pay $43,663 in disgorgement, representing the remainder of his tippees’ profits; $4,540 in pre-judgment interest; and a civil penalty of $43,663.
The Commission gratefully acknowledges the assistance provided by The American Stock Exchange in the investigation of this matter.http://www.sec.gov/litigation/litreleases/lr16187.htm