U.S. Securities & Exchange Commission
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U.S. Securities and Exchange Commission

Washington, D.C.

Litigation Release No. 16997 / May 11, 2001

Securities and Exchange Commission v. Alejandro Duclaud Gonzalez de Castilla, et al., 01 Civ. 3999 (RWS) (S.D.N.Y.)


SEC Obtains Emergency Order Freezing Over $6 Million In Assets of Mexican Nationals Who Traded Before Announcement of Grupo Sanborns' Tender Offer

The Securities and Exchange Commission today announced that the U.S. District Court for the Southern District of New York entered a temporary restraining order on May 10, 2001 against eight Mexican nationals and four offshore entities in connection with possible insider trading in CompUSA, Inc. stock that produced profits of nearly $4 million. The trading occurred before the January 24, 2000 public announcement that CompUSA had agreed to be acquired by Grupo Sanborns, S.A. de C.V., a Mexican holding company. One of the defendants, Alejandro Duclaud, is a partner in the Mexico City law firm that represented Grupo Sanborns in the final days of the tender offer negotiations and that acts as regular outside counsel to Grupo Sanborns. Most of the other defendants are members of his family or offshore entities that permit the family members to trade anonymously. The order temporarily prohibits the defendants from obtaining their assets in brokerage accounts in the United States or disposing of any assets, wherever held, in a manner that could impair the Commission's ability to recover ill-gotten gains and obtain civil penalties.

Named as defendants are Alejandro Duclaud Gonzalez de Castilla, his wife Ana Igartua Baranda de Duclaud, his brother Jose Antonio Duclaud Gonzalez de Castilla, Rodrigo Igartua Baranda, Pablo Velazquez Baranda, Martha Baranda de Igartua, Elvira Baranda Garcia, Maricruz Lozano Ledzma, Anushka Trust, Caribbean Legal Trust, Antares Holdings Investment Ltd., and Banrise Ltd. BVI.

The Commission's complaint alleges, among other things, the following: by December 3, 1999, Grupo Sanborns had taken substantial steps to commence the tender offer. On January 6, 2000, when CompUSA was trading around $5.25 per share, the defendants bought 325,000 CompUSA shares, about 27% of CompUSA volume that day. On January 19, 2000, when CompUSA was still around $5.50 per share, the defendants bought 273,000 CompUSA shares day, about 25% of volume. On January 20, 2000, the defendants bought 170,000 CompUSA shares, more than 6% of volume. CompUSA closed that day at $6.125 per share. On Monday January 24, 2000, before trading opened, Grupo Sanborns and CompUSA announced the tender offer at $10.10 per share. CompUSA stock rose about 40 percent, closing that day at $9.50 per share. Within two days the defendants had sold all their CompUSA stock, making profits of nearly $4 million.

The Commission's lawsuit charges the defendants with violating two antifraud provisions of the federal securities laws, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and the provisions against insider trading in the securities of a tender offer target, Section 14(e) of the Exchange Act and Rule 14e-3. The Commission seeks a permanent injunction, the disgorgement of all illegal profits, and the imposition of civil monetary penalties.

The court's temporary restraining order prohibits the removal of assets of Defendants sufficient to equal four times their profits from illegal insider trading in the common stock of CompUSA, pending a May 23 hearing on the Commission's application for a preliminary injunction. In addition, the court's order requires expedited discovery and prohibits the defendants from destroying documents.

The Commission's investigation into these matters is continuing.

The Commission acknowledges the assistance of the New York Stock Exchange and HM Attorney General of the Bailiwick of Guernsey, Channel Islands, in this matter.