SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17789 / October 16, 2002
Securities and Exchange Commission v. Larry F. Smath, Gregory R. Salvage, Joseph T. Falcone, Peter L. Cohen, Seth J. Glaser and Frank Zangara, CV-99-523 (E.D.N.Y.) (TCP)
TWO LONG ISLAND BROKERS SETTLE INSIDER TRADING CHARGES ARISING OUT OF PRE-PUBLICATION ACCESS TO BUSINESS WEEK MAGAZINE
On October 3, 2002, the Honorable Thomas C. Platt of the United States District Court for the Eastern District of New York entered consent judgements against defendants Peter L. Cohen and Seth J. Glaser for their involvement in an insider trading scheme involving trading on the basis of non-public information about the contents of the "Inside Wall Street" column in Business Week magazine. The judgments settle claims the Commission asserted against these two defendants in a civil action filed on January 27, 1999.
The Commission's Complaint alleges that, from June 1995 to January 1996, Cohen, Glaser, and four other defendants participated in an insider trading scheme involving nonpublic advance copies of the "Inside Wall Street" column of Business Week magazine. At the time of their participation, the Complaint alleges, Cohen and Glaser were registered representatives at Renaissance Financial Securities Corp., a now defunct broker-dealer in Mineola, New York. The Complaint alleges that Cohen and Glaser paid cash to defendant Larry F. Smath, a fellow broker at Renaissance, in exchange for nonpublic advance copies of a series of "Inside Wall Street" columns that Smath had illegally obtained from defendant Gregory R. Salvage, a foreman at Hudson News Company. While in possession of the nonpublic information, the Complaint alleges, Cohen and Glaser traded securities mentioned in the columns and recommended those securities to their customers, illegally obtaining trading profits and brokerage commissions on client trades. In total, the six defendants and their family members and customers purchased approximately $8 million of securities mentioned in "Inside Wall Street" columns.
Without admitting or denying the allegations in the Complaint, Cohen and Glaser each consented to the entry of Final Judgments which: (a) permanently enjoin them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; (b) order them each to pay $4,073.53 in disgorgement and prejudgment interest; and (c) order them each to pay a civil penalty of $6,988.50. In related criminal proceedings brought by the United States Attorney's Office for the Eastern District of New York, Cohen and Glaser previously pleaded guilty to one felony count each of conspiracy to commit securities fraud, and Smath pleaded guilty to one felony count of conspiracy to commit securities fraud. Defendant Joseph T. Falcone was found guilty by a jury of thirteen felony counts of securities fraud and one count of conspiracy to commit securities fraud.
The Commission's action remains pending against the four other defendants.
For further information about the Commission's Complaint, see Litigation Release No. 16047 (January 29, 1999). For information regarding Falcone's criminal conviction, see Litigation Release No. 16352 (November 10, 1999).