U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16438 / February 16, 2000
Securities and Exchange Commission v. Lorraine K. Cassano, Civil Action No. 99-CV-3822 (S.D.N.Y.)
TWO MORE TRADERS SETTLE LOTUS INSIDER TRADING CHARGES BY AGREEING TO PAY MORE THAN $156,000 IN DISGORGEMENT AND PENALTIES
The Securities and Exchange Commission today announced that Carmine DeSantis and Lawrence DeMonte, both of Staten Island, New York, have agreed to settle Commission charges that they engaged in insider trading in advance of IBM's takeover of Lotus Development Corporation. DeSantis has agreed to pay $16,101 in trading profits, $6,796 in prejudgment interest and a civil penalty of $16,101. DeMonte has agreed to pay $48,360 in trading profits, $20,864 in prejudgment interest and a civil penalty of $48,360. Both DeSantis and DeMonte also have consented to the entry of permanent injunctions prohibiting future violations of Section 14(e) of the Securities Exchange Act of 1934 and Rule 14e-3 thereunder. In consenting to the entry of the final judgment, DeSantis and DeMonte neither admitted nor denied the Commission´s allegations against them.
On May 26, 1999, the Commission charged DeSantis, DeMonte and twenty-three others with insider trading in Lotus options and stock. Specifically, the Commission alleged that DeSantis, a lawyer, purchased short-term Lotus call options on June 2, 1995, after being tipped by a friend and client of his law firm, Peter G. Mazzone. The Commission charged DeMonte, a grocery store executive, with purchasing short-term out-of-the-money Lotus call options on June 2 on the basis of a tip he received from a business associate, Isaac Lederman, who, in turn, also had been been tipped by Mazzone. The Commission further alleged that Mazzone had obtained the information indirectly from Lorraine Cassano, an IBM secretary who had misappropriated information about the then-secret takeover plan from IBM. According to the Commission´s complaint, DeSantis was a fourth-tier tippee, and DeMonte was fifth-tier tippee, of Cassano. Mazzone and Cassano were among the others charged by the Commission.
DeSantis and DeMonte are the seventh and eighth defendants to settle the Commission´s charges; the Commission is continuing to litigate against the remaining defendants. In a related criminal action brought by the Office of the United States Attorney for the Southern District of New York, DeSantis also was convicted of conspiracy to obstruct the Commission´s investigation of this matter. DeSantis´ license to practice law has been suspended pending the resolution of disciplinary proceedings brought by the New York state bar authorities based upon DeSantis´ obstruction of justice conviction.
For further information, please see Litigation Release Nos. 16278 (September 13, 1999), 16185 (June 10, 1999) and 16161 (May 26, 1999).http://www.sec.gov/litigation/litreleases/lr16438.htm