Securities and Exchange Commission
Commission Charges Former Corporate Director and Ex-wife with Illegal Insider Trading
Litigation Release No. 17170 / October 4, 2001
Securities and Exchange Commission v. Sol Berg and Rosa Hodgson, 01 Civ. 8899
On October 4, 2001, the Securities and Exchange Commission filed a complaint in the United States District Court for the Southern District of New York alleging insider trading by Sol Berg, a member of the Board of Directors of LeaRonal, Inc. from 1972 through 1999, and his former wife, Rosa Hodgson.
The Commission's complaint alleges that Hodgson, while in possession of material, nonpublic information provided by Berg, engaged in illegal insider trading in LeaRonal, Inc. stock. During the second half of 1998, Berg, as a Director of LeaRonal, Inc., learned that Rohm and Haas, Inc. was negotiating with LeaRonal, Inc. to commence a tender offer for LeaRonal, Inc.'s outstanding capital stock. Berg told Hodgson that LeaRonal, Inc. was conducting confidential merger negotiations, and Hodgson then acquired LeaRonal, Inc. stock. Specifically, during October and December 1998, Hodgson bought LeaRonal, Inc. shares for herself, gave shares as a gift to a close friend, and bought additional shares for her daughter. On December 21, 1998, LeaRonal, Inc. and Rohm and Haas, Inc. jointly announced a tender offer by Rohm and Haas, Inc. to purchase LeaRonal, Inc. for $34.00 per share or about $460 million. The ill-gotten gains from Hodgson's various illegal trades in LeaRonal, Inc. were $36,270.50.
Simultaneous with the filing of the complaint, Berg and Hodgson consented, without admitting or denying the allegations in the complaint, to the entry of a final judgment: (1) permanently enjoining Berg and Hodgson from committing securities fraud in violation of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934, and Exchange Act Rules 10b-5 and 14e-3; (2) ordering Hodgson to disgorge $31,622.50, the profits from the illegal trades she made in LeaRonal, Inc. stock for her own account, and to pay prejudgment interest on that amount; (3) ordering Hodgson to disgorge profits of illegal trades ordered by Hodgson for the benefit of others in the amount of $4,648, and (4) ordering Berg and Hodgson to each pay a civil penalty of $36,270.50.