U.S. Securities and Exchange Commission
LITIGATION RELEASE NO. 18806 / July 29, 2004
Securities and Exchange Commission v. Kenneth F. Kryzda, Civil Action No. 04 CV 5853 (RO) (S.D.N.Y.) (July 28, 2004)
FORMER INVESTMENT BANKER CHARGED WITH INSIDER TRADING
The Securities and Exchange Commission announced today that it filed a civil injunctive action yesterday against Kenneth F. Kryzda, a former managing director of JP Morgan Chase Bank ("JP Morgan"), and a citizen of the United States and Mexico and a resident of Mexico City, Mexico. In its Complaint, the Commission alleges that Kryzda engaged in insider trading in connection with his purchases of the common stock of Panamerican Beverages, Inc. ("Panamerican") prior to the December 23, 2002 announcement that Panamerican would be acquired by Coca-Cola FEMSA S.A. de C.V.
According to the Complaint, Kryzda learned of the proposed acquisition in the course of his employment as an investment banker in the Mexico City office of JP Morgan. While working at JP Morgan, Kryzda and JP Morgan proposed to Coca-Cola FEMSA that it retain JP Morgan to finance an acquisition of Panamerican. Also, Kryzda learned that Panamerican had retained JP Morgan to advise it on whether to sell to Coca-Cola FEMSA. The Complaint alleges that, after being laid off by JP Morgan, Kryzda misappropriated this and other material, nonpublic information concerning a possible acquisition of Panamerican from JP Morgan and then purchased shares of Panamerican stock prior to the merger announcement. According to the Complaint, on November 20 and 21, and December 19 and 20, 2002, Kryzda purchased a total of 7,100 Panamerican shares. The merger was publicly announced on December 23, 2002, and on that day, Panamerican shares closed at $20.59, an approximately 100% increase from the prior day's close. On December 30, 2002, seven days after the merger announcement, Kryzda sold all his Panamerican shares. He made profits of $78,944.
Kryzda, without admitting or denying the allegations in the Commission's Complaint, has consented to the entry of a Final Judgment permanently enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Exchange Act Rule 10b-5. Kryzda also has agreed to pay a total of $202,701.16, representing disgorgement of his illegal insider trading profits, prejudgment interest, and a civil penalty of one and a half times his trading profits.
The Commission acknowledges the assistance of the New York Stock Exchange.
The Commission's investigation is continuing.