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U.S. Securities and Exchange Commission

U.S. Securities and Exchange Commission
Washington, D.C.

LITIGATION Release No. 16805 / November 20, 2000

Securities and Exchange Commission v. Andrea Caputo and Gerard J. Bell, U.S. District Court for the Southern District of New York (00 Civ. 2285) (KMW)


On October 30, 2000, the Honorable Kimba M. Wood entered a Final Judgment by consent concluding the Securities and Exchange Commission's litigation against Gerard J. Bell. The Commission's complaint, filed on March 27, 2000, alleged that Bell and Andrea Caputo violated Securities Exchange Act Section 14(e) and Rule 14e-3 by illegal insider-trading trading in advance of the November 16, 1994, public announcement that The Thomson Corporation would launch a tender offer for The MEDSTAT Group, Inc. ("Medstat").

More specifically, the complaint alleged that Caputo bought Medstat stock and tipped Bell after learning from a close friend, who was a Thomson Corporation insider, that Thomson was interested in acquiring Medstat. Bell, a neighborhood friend of Caputo's and a fellow Brooklyn restaurant owner, bought Medstat securities and recommended it to two friends of his who also purchased Medstat. According to the complaint, Bell made $63,200 on the 2,575 Medstat shares and 40 Medstat call options he held when the tender offer was announced, and his two friends reaped trading profits of $91,214 and $13,519.

Without admitting or denying the Commission's allegations, Bell consented to the entry of a permanent injunction against future violations of Section 14(e) and Rule 14e-3. He was also ordered to pay disgorgement of $167,953, however, based on Bell's sworn Statement of Financial Condition, the payment of all but $86,000 was waived and no civil penalty was imposed. Caputo previously settled the case against her, without admitting or denying the Commission's allegations, by agreeing to a permanent injunction and to pay approximately $237,000 in disgorgement, interest and penalties. See Lit. Rel. 16487 (March 27, 2000).