United States Securities and Exchange Commission
Litigation Release No. 17597 / July 3, 2002
Securities and Exchange Commission v. Barry L. Saffer, 02 CV 5117 (SWK) (S.D.N.Y.)
SEC Charges Senior Financial Official with Insider Trading
On July 2, 2002, the Securities and Exchange Commission filed a complaint in the United States District Court for the Southern District of New York against Barry L. Saffer, a former senior financial official for Manugistics Group, Inc., a software company located in Rockville, Maryland. The complaint charges that Saffer engaged in at least seven episodes of trading in the securities of Manugistics while he possessed material, nonpublic information about the company and that his profits from the illegal trading exceeded $200,000.
The complaint alleges that Saffer, age 36, a resident of Gaithersburg, Maryland, was Manugistics' former Director of Financial Planning and Analysis and he reported directly to the company's Chief Financial Officer. According to the complaint, Saffer was one of a small number of senior officials whom Manugistics' entrusted with unlimited access to material, nonpublic information about the company. He was responsible for Manugistics' financial analyses and forecasts. He prepared the company's quarterly earnings estimates based upon, among other things, the company's prior actual quarterly results, at a time when those results were nonpublic. He also helped to prepare the company's press releases and scripts for quarterly conference calls with investors and stock market analysts. Saffer was also routinely privy to confidential, top level discussions by senior Manugistics' officials regarding the company's finances, plans and problems. He was involved in the analysis and planning for significant financial events, such as mergers, acquisitions and layoffs. According to the complaint, Saffer thus knew information about Manugistics' financial performance and impending major events before such information was disclosed to the public.
The complaint alleges that from January 1999 through March 2002, Saffer engaged in seven episodes of illegal insider trading. He traded in advance of an acquisition announcement, a layoff announcement, and five quarterly earnings announcements. Following each of these announcements, Manugistics' closing share price changed by at least 12 percent and as much as 54 percent. Saffer realized unlawful profits of $207,408 from his seven episodes of insider trading.
The complaint also alleges that Saffer's insider trading violated Manugistics' company policies which prohibited its senior officials, including Saffer, from trading in options on the company's stock, trading during company blackout periods, trading without clearance from the company, and trading while in possession of material, nonpublic information.
The Commission alleges that as a result of the conduct described above, Barry Saffer violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission seeks a permanent injunction, disgorgement of illegal trading profits, prejudgment interest and civil penalties.
Today, the United States Attorney for the Southern District of New York announced that on July 2, 2002, Barry Saffer pleaded guilty to criminal charges arising from the conduct alleged in the Commission's complaint.
The Commission acknowledges the assistance provided by the Chicago Board Options Exchange in the investigation of this matter.