LITIGATION RELEASE NO. 17482 / April 23, 2002
Securities and Exchange Commission v. Scott K. Ginsburg , Civil Action No. 99-8694-CIV-RYSKAMP (S.D.Fla. West Palm Beach Div.)
JURY FINDS SCOTT K. GINSBURG, FORMER CEO OF EVERGREEN MEDIA CORPORATION, LIABLE FOR INSIDER TRADING FOR TIPPING HIS FATHER AND BROTHER, WHO REAPED ILLEGAL TRADING PROFITS OF $1.8 MILLION
On April 16, 2002, a federal jury in the Southern District of Florida found Scott K. Ginsburg liable for illegal insider trading based on his tips to, and trading by, his brother, Mark J. Ginsburg, and father, Jordan E. Ginsburg, in the common stock of EZ Communications, Inc., formerly a NASDAQ-listed company, and Katz Media Group, Inc., formerly listed on the American Stock Exchange. The SEC's lawsuit, filed on September 9, 1999, alleged that Scott Ginsburg, then the chairman and chief executive officer of Evergreen Media Corporation, a publicly-held radio company, tipped Mark Ginsburg with information that EZ was for sale and that Mark Ginsburg then purchased EZ stock and tipped their father, Jordan Ginsburg, who also purchased EZ stock prior to the announcement of the sale of EZ to another radio company. The SEC's complaint also alleged that, less than a year later, in June 1997, Scott Ginsburg tipped Mark Ginsburg with information about the sale of Katz Media at a time when substantial steps had been taken by Chancellor Broadcasting Corporation and Evergreen towards a joint tender offer for the shares of Katz Media. According to the complaint, the day after the tip Mark Ginsburg purchased Katz Media stock. The SEC's complaint further alleged that Mark and Jordan Ginsburg realized illegal profits of $1.8 million from their trading.
After a seven-day trial, presided over by U.S. District Judge Kenneth L. Ryskamp, the jury found that Scott Ginsburg violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. At a later date, the court will determine the appropriate relief, which may include a permanent injunction and civil penalties. Previously, on March 30, 2002, Mark Ginsburg and Jordan Ginsburg settled the SEC's insider trading charges against them, without admitting or denying the SEC's allegations, by consenting to the entry of final judgments that included permanent injunctions, disgorgement, prejudgment interest and civil money penalties totaling over $4.7 million. The SEC acknowledges the valuable assistance provided by The American Stock Exchange in certain parts of the investigation of this matter. For further information, please see Litigation Release No. 17455 (April 4, 2002) and Litigation Release No. 16275 (September 9, 1999).