SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16285 / September 20, 1999
SEC RECOVERS OVER $750,000 IN PENALTIES AND DISGORGEMENT FROM THREE WASHINGTON DC-AREA PROFESSIONALS FOR INSIDER TRADING
Securities and Exchange Commission v. Lawrence J. Rosenfeld, Robert J. Sher and Jennifer R. Weiss, U.S.D.C. for the District of the District of Columbia, Civil Action No. 1:99CV02465
The SEC today announced the filing of a settled complaint for insider trading in the securities of BDM International, Inc. against Lawrence J. Rosenfeld of McLean, Virginia, Dr. Robert J. Sher of Bethesda, Maryland, and Jennifer R. Weiss of Arlington, Virginia. Under the settlement, the defendants consent to pay over $750,000 in penalties and disgorgement.
BDM was a defense and information technology company, headquartered in McLean, Virginia. The complaint alleges that in November 1997 Rosenfeld, an advertising executive, tipped his friends Sher and Weiss to a pending tender offer for BDM by TRW, Inc. Sher and Weiss traded in BDM stock ahead of the tender offer and made illicit profits of $102,819.47 and $8,437.50 respectively. In addition, Sher recommended BDM to six professional colleagues and family members who also purchased BDM securities ahead of the tender offer, and these persons made profits totaling $202,559.08. The tipping and trading violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder.
According to the complaint Rosenfeld, age 49, was president of Stackig, Sanderson & White, an advertising agency which prepared a document used by BDM to market itself. Sher, age 48, is a Maryland urologist and Rosenfeld's long time friend. Sher read Rosenfeld's copy of the document while visiting Rosenfeld's home and Rosenfeld confirmed that BDM was seeking to be acquired. Rosenfeld later told Sher other details of TRW's offer for BDM. Sher then purchased BDM stock and recommended BDM to professional colleagues and family members. Weiss, age 35, was a sales representative for a trade magazine frequently used by Rosenfeld's agency. Weiss purchased BDM stock following a meeting with Rosenfeld in which Weiss learned material nonpublic information about BDM.
Prior to the filing of the action, Rosenfeld, Sher and Weiss consented, without admitting or denying the allegations of the complaint, to the entry of final judgments which will permanently enjoin them from violations of Sections 10(b) and 14(e) of the Exchange Act and Rules 10b-5 and 14e-3 thereunder. Pending approval by the Court, Sher also consented to pay disgorgement of $305,378.55, equal to the profits of his own trading and the profits of the six colleagues and family members who traded BDM on his recommendation, a civil penalty of $305,378.55, and prejudgment interest of $36,277.49. Weiss consented to pay disgorgement of $8,437.50, a civil penalty of $8,437.50, and prejudgment interest of $940.99. Rosenfeld consented to pay a civil penalty of $111,256.97, equal to the profits of Sher and Weiss. The total payments will be $776,107.55.