On November 18, 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 IV ("Doody") of Newtown, Pennsylvania, in a Commission action that charged him with insider trading in the securities of BetzDearborn Inc. This judgment represents the final settlement in the five insider trading cases brought by the Commission to address trading before the merger of BetzDearborn and Hercules in 1998. The Commission filed suit against a total of eighteen defendants, and obtained final judgments against each of them, collectively ordering approximately $4 million in disgorgement, prejudgment interest, and penalties.
The Commission alleged in its complaint in this matter, filed in November 2001, that Diane C. Neiley, a former employee of BetzDearborn Inc., Doody, 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 Commission alleged that Neiley, an executive assistant at BetzDearborn, learned confidential information regarding the merger and tipped her then-boyfriend, Doody, who in turn tipped his father. The Commission alleged that Doody purchased BetzDearborn common stock and call options that he sold after the merger announcement, realizing $240,953 in illegal profits. The Commission further alleged that Doody also tipped his father, Joseph F. Doody, who 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) and Rule 10b-5, and imposed no civil penalty based on her sworn financial statement. In July 2003, Joseph F. Doody settled with the Commission by consenting to a final judgment that permanently enjoined him from violating Section 10(b) and Rule 10b-5, and ordered him to disgorge his illegal profits of $30,813, together with $12,340 in prejudgment interest, and pay civil penalties of $30,813.
The final judgment entered by the court on November 18 permanently enjoined Doody from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. It also waived payment of his illegal profits of $240,953 and prejudgment interest, and did not impose a civil penalty, based on Doody's sworn financial statements. Doody settled the action without admitting or denying the allegations in the Commission's complaint. He is currently serving an 18-month prison term in connection with a related criminal proceeding in which he pled guilty to one count of insider trading and one count of obstruction of justice in December 2002.
Today, the Commission also instituted administrative proceedings to bar Doody from the securities industry. Doody consented to the entry of the Commission's Order, which bars him from association with any broker, dealer, municipal securities dealer, or investment adviser. In the Matter of Joseph F. Doody IV, Administrative Proceeding File No. 3-11348; Securities Exchange Act of 1934 Release No. 48870 (December 3, 2003).
See also Litigation Release Nos. 17225 and 18232. 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).