LITIGATION RELEASE No. 17612 / July 15, 2002
Securities and Exchange Commission v. Scott K. Ginsburg, Civil Action No. 99-8694-CIV-RYSKAMP (S.D.Fla. West Palm Beach Div.)
SCOTT K. GINSBURG, FORMER CEO OF EVERGREEN MEDIA CORPORATION, ORDERED TO PAY ONE MILLION DOLLAR PENALTY FOR INSIDER TRADING
Scott K. Ginsburg, the former chairman and chief executive officer of Evergreen Media Corporation, who was found liable for insider trading, was ordered to pay a $1 million civil penalty by Judge Kenneth L. Ryskamp of the United States District Court for Southern District of Florida. The civil penalty against Ginsburg is the largest penalty ordered by a federal district court against a non-trading tipper. However, the court declined the SEC's request for a permanent injunction to enjoin Ginsburg from future violations of the antifraud and tender offer provisions of the federal securities laws.
Judge Ryskamp's order, which was issued July 8, 2002, resulted from a seven-day trial which concluded on April 16, 2002 with a verdict that Ginsburg had violated Sections 10(b) and 14(e) of the Securities Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The federal jury found 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. However, the Court did not determine Ginsburg's sanctions at the time of the jury's verdict. Previously, on March 30, 2002, Mark Ginsburg and Jordan Ginsburg settled the SEC's allegations of insider trading, by consenting to the entry of final judgments, which were entered on April 1, 2002, 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. 17482 (April 23, 2002), Litigation Release No. 17455 (April 4, 2002), and Litigation Release No. 16275 (September 9, 1999).