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 Partial Summary Judgment against defendant Norman Grossman on November 5, 2003. The Commission has now resolved all claims against Grossman arising from a civil action filed by the Commission on March 14, 2000, alleging that from 1997 through January 2000, Grossman and others engaged in a widespread insider trading scheme that resulted in over $8 million in illegal trading profits. The judgment against Grossman permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Grossman was also ordered to pay disgorgement of $435,687, prejudgment interest of $105,208, and a civil penalty of $435,687.
In a related criminal proceeding, Grossman previously pled guilty to insider trading, and was sentenced to twenty-one months incarceration and a $300,000 fine. Grossman is currently serving his sentence.
The Commission's Complaint alleges that John Freeman, a temporary word-processing employee at Goldman Sachs & Co., Inc. and later Credit Suisse First Boston Corporation, tipped a number of defendants (including Grossman) about merger and acquisition transactions involving clients of those investment banking firms. Specifically, John Freeman tipped Grossman in advance of eight deals. Grossman then realized profits of $435,687 by trading on this inside information. In exchange for the inside information, Grossman gave Freeman expensive bottles of wine from Grossman's wine collection, as well as cash.
The Commission's civil action has now been concluded against eighteen of the nineteen original defendants. The Commission settled the case against fifteen defendants and also obtained administrative bars against three of the settling defendants.
See: L.R. 16469 (March 14, 2000); L.R. 17267 (December 12, 2001); L.R. 17501 (May 2, 2002); L.R. 17912 (January 2, 2003); L.R. 18149 (May 20, 2003); and L.R. 18175 (June 5, 2003).