United States Securities and Exchange Commission
Litigation Release No. 18232 / July 17, 2003
Securities and Exchange Commission v. Joseph F. Doody IV, Joseph F. Doody, and Diane C. Neiley, NO. 02-2932 (E.D. Pa.)
SEC Settles Insider Trading Charges With Pennsyvlania Resident For Illegal Trades In BetzDearborn Inc.
On July 11, 2003, Judge William H. Yohn, Jr. in the United States District Court for the Eastern District of Pennsylvania entered a final judgment against Joseph F. Doody ("Doody") of Churchville, Pennsylvania. The defendant was ordered to disgorge $43,153 in illegal profits and prejudgment interest, and pay a $30,813 civil penalty in a Commission action that charged him with insider trading in the securities of BetzDearborn Inc. Doody settled the action without admitting or denying the allegations in the Commission's complaint.
The Commission's complaint in this matter, filed in November 2001, alleged that Diane C. Neiley, a former employee of BetzDearborn Inc., Joseph F. Doody IV (Doody IV), and his father, Joseph F. Doody, engaged in illegal insider trading in advance of the July 30, 1998 announcement that BetzDearborn Inc. and Hercules Inc. had agreed to merge. The complaint alleged that Neiley, an executive assistant at BetzDearborn, learned confidential information regarding the merger and tipped her then-boyfriend, Doody IV, who in turn tipped his father. According to the complaint, Doody IV purchased BetzDearborn common stock and call options that he sold after the merger announcement, realizing $240,953 in illegal profits. The complaint alleged that after being tipped by his son, Joseph Doody bought BetzDearborn common stock that he sold after the announcement for unlawful profits of $30,813.
In November 2001, Neiley settled with the Commission by consenting to a final judgment that permanently enjoined her from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and imposed no civil penalty based on her sworn financial statement.
In October 2001, Doody IV was indicted for securities fraud for his transactions in BetzDearborn securities. In December 2002, Doody IV pled guilty to one count of insider trading and one count of obstruction of justice. He was sentenced to 18 months in prison. The Commission's case continues against Doody IV.
Without admitting or denying the allegations in the Commission's complaint, Joseph F. Doody consented to entry of the final judgment which permanently enjoins him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and orders him to disgorge his illegal profits of $30,813, together with $12,340 in prejudgment interest, and pay civil penalties of $30,813.
See also Litigation Release No. 17225 (November 8, 2001). See also the following related matters: SEC v. Rodolfo Luzardo, et al., 01 Civ. 9206 (DC) (S.D.N.Y.) (filed October 18, 2001) (Litigation Release Nos. 17197, 17486 and 17850); SEC v. Bugenhagen, et al., 01 Civ. 6538 (E.D.PA.) (filed December 18, 2001) (Litigation Release No. 17278); SEC v. Litvinsky, et al., 02 Civ. 0312 (LMM) (S.D.N.Y.) (filed January 14, 2002) (Litigation Release No. 17306); and SEC v. Straub, et al., 1:02CV01128 (EGS) (D.D.C.) (filed June 10,2002) (Litigation Release No. 17549). To date, the Commission has brought five insider trading cases concerning trading before the merger of BetzDearborn and Hercules against 18 defendants, and has obtained approximately $4 million in disgorgement, prejudgment interest, and penalties.