SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17733 / September 18, 2002
SECURITIES AND EXCHANGE COMMISSION V. HARVEY R. DOBROW AND LAWRENCE M. DOBROW, 02-CV- 7514 (NB)(S.D.N.Y.)
On September 18, 2002, the Securities and Exchange Commission filed a complaint in the United States District Court for the Southern District of New York alleging illegal insider trading by Harvey Dobrow, 60, a medical doctor in Fairlawn, New Jersey, and his son Lawrence Dobrow, 31, a public relations executive in New York, New York. The Commission's complaint alleges that on March 22, 2000, the Dobrows violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, when Harvey Dobrow bought 2,000 shares of common stock in H.D. Vest, Inc. (H.D.Vest) while in possession of material, nonpublic information he had received from Lawrence Dobrow concerning an impending takeover of H.D. Vest by Wells Fargo & Co. (Wells Fargo).
The Dobrows, without admitting or denying the Commission's allegations, have consented to the relief sought in the Commission's complaint. In his consent, Harvey Dobrow agreed to disgorge $27,436.12 in illegal profits plus $2,265.41 prejudgment interest, and to pay an additional $34,295.15 civil penalty, an amount equal to 1.25 times his illegal profits. Lawrence Dobrow has consented to pay a $34,295.15 civil penalty for his role in tipping his father about the impending takeover. The Dobrows have also consented to the entry of permanent injunctions from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
Specifically, the Commission's Complaint alleges:
- From December 2000 until April 2001, Lawrence Dobrow was an H.D.Vest "temporary insider" due to his work as an account director in the New York office of Ogilvy Public Relations Worldwide (Ogilvy). During that time, Lawrence Dobrow was part of an Ogilvy team that managed public and investor relations in connection with the sale of H.D.Vest to Wells Fargo. Lawrence Dobrow passed insider information about the takeover to Harvey Dobrow on or before March 22, 2001, while that information was still confidential.
- On March 22, 2001, after Lawrence Dobrow had tipped him that Wells Fargo was going to acquire H.D.Vest, Harvey Dobrow purchased 2,000 shares of H.D.Vest common stock at various prices between $6.00 and $7.00 per share, for a total of $13,313.88.
- On March 23, 2001, after a press release announcing the H.D.Vest takeover, the price of H.D.Vest stock, which had closed at $7.00 on March 22, 2001, rose $13.38 to close at $20.38, earning Harvey Dobrow an illegal potential profit of $27,436.12 on his 2,000 shares of H.D.Vest stock.
SEC Complaint in this matter