Litigation Release No. 17912 / January 2, 2003
Securities and Exchange Commission v. John Freeman, James Cooper, Benton Erskine, Anthony Seminara, Norman Lehrman, Linda Karlsen, Timothy Siemers, Norman Grossman, Lawrence Schwartz, Michael Akva, Robert Fricker, Richard Zelman, Bradley Burke, Benjamin Cooper, Chad L. Conner, Deon Benson, Gordon K. Allen, Jr., Jon Geibel, and William H. Borders II, 00 Civ. 1963 (VM) (Southern District of New York)
SEC SETTLES CLAIMS INVOLVING INSIDER TRADING AGAINST THREE DEFENDANTS
The Securities and Exchange Commission ("Commission") today announced that the Honorable Victor Marrero of the United States District Court for the Southern District of New York entered Final Judgments of permanent injunction and other relief against defendants James Cooper ("Cooper") and Deon Benson ("Benson") of Bowling Green, Kentucky on December 23, 2002, and against defendant Richard Zelman ("Zelman") of Nyack, New York on December 20, 2002. These judgments settle the Commission's claims against these three defendants in a civil action filed by the Commission on March 14, 2000, alleging that from 1997 through January 2000, these defendants and others engaged in a widespread insider trading scheme that produced over $8 million in illegal profits from trading in the securities of 23 public companies.
The Commission's Complaint alleged that John Freeman, a temporary word-processing employee at Goldman Sachs & Co., Inc. and later Credit Suisse First Boston, tipped a number of defendants about merger and acquisition transactions involving clients of those investment banking firms. The Complaint alleged that Freeman and two individuals he met in an Internet chat room, Benton Erskine and James Cooper, launched the insider trading scheme. Cooper traded in advance of sixteen transactions and realized profits of $227,192. Cooper also tipped several persons who traded and realized profits of over $1 million collectively. One of Cooper's tippees, Deon Benson, traded in advance of ten transactions and realized profits of $838,982. The Complaint also alleges that Benson tipped his broker, who traded and realized profits of $84,150. Freeman also provided tips to his neighbor, Richard Zelman. Zelman did not purchase securities; however, the complaint alleges he did tip his friend in Florida who purchased securities in advance of four transactions and realized profits of $200,905.
Without admitting or denying the allegations in the Complaint, the defendants consented to the entry of Final Judgments that permanently enjoin them from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. Cooper was ordered to pay disgorgement in the amount of $1,267,674 with pre-judgment interest in the amount of $520,666, but payment was waived for the amount exceeding $57,650 based upon his sworn Statement of Financial Condition. Benson was ordered to pay disgorgement in the amount of $923,132 with pre-judgment interest in the amount of $356,399, but payment was waived for the amount exceeding $250,000 based upon his sworn Statement of Financial Condition. Zelman was ordered to pay disgorgement in the amount of $200,905 with pre-judgment interest in the amount of $55,788, but payment of the full amount was waived based upon his sworn Statement of Financial Condition. Civil penalties were not imposed against defendants Cooper, Benson, and Zelman based upon each defendant's sworn Statement of Financial Condition. Cooper, Benson, and Zelman each previously pleaded guilty in parallel criminal proceedings handled by the United States Attorney's Office for the Southern District of New York.
See also: L.R. 16469 (March 14, 2000); L.R. 17267 (December 12, 2001); and L.R. 17501 (May 2, 2002)