Steve Madden

LITIGATION RELEASE NO. 17015 / May 23, 2001

SECURITIES AND EXCHANGE COMMISSION V. STEVE MADDEN, 01-CV-3311(JG)(E.D.N.Y.)

On May 23, 2001, the Securities and Exchange Commission filed a complaint in the United States District Court for the Eastern District of New York alleging illegal insider trading by shoe designer, Steven Madden (Madden). The Commission's complaint alleges that on May 31, 2000, Madden, a resident of New York, NY, violated Section 17(a) of the Securities Act of 1933 (Securities Act), and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, when he sold 100,000 shares of common stock in Steven Madden Ltd (SHOO) while in possession of material, non-public information.

Madden, without admitting or denying the Commission's allegations, has consented to the relief sought in the Commission's complaint. In his consent, he has agreed to disgorge $784,000 of illegally avoided losses plus $69,015.84 in prejudgment interest, and to pay an additional $784,000 civil penalty. Madden has also consented to the entry of a permanent injunction from future violations of Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

Specifically, the Commission's Complaint alleges:

• On December 20, 1999, Madden and his attorneys met with representatives of the U.S. Attorney's Offices for the Eastern District (USAO-EDNY) and the Southern District (USAO-SDNY) of New York and the Federal Bureau of Investigation (FBI). During the meeting, Madden was informed that he: (a) had been the target of USAO-EDNY and USAO-SDNY investigations into Madden's participation in over twenty fraudulent initial public offerings (including SHOO's initial public offering) and stock manipulations at two brokerage firms, Stratton Oakmont, Inc. and Monroe Parker Securities, Inc. and (b) would be indicted or otherwise charged for securities fraud. Madden was also told that the principals of both Stratton Oakmont and Monroe Parker were cooperating with the government and would testify against him.

• On May 31, 2000, Madden sold 100,000 shares of SHOO common stock at $16.00 per share without disclosing to the public the information he had learned on December 20, 1999. On June 20, 2000, Madden was arrested and charged with, among other things, conspiracy to commit securities fraud and securities fraud.

• When the news of Madden's arrest became public on June 20, 2000, the National Association of Securities Dealers suspended trading in SHOO stock. When trading resumed on June 22, 2000, SHOO's share price, which had closed at $13.13 on June 19, 2000, fell as low as $5.50 before closing at $6.69. By selling his stock on May 31, 2000, Madden illegally avoided losses of $784,000.

The Commission acknowledges the assistance of the United States Attorney's Offices for the Eastern District of New York and the Southern District of New York in the investigation of this matter.