U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19328 / August 8, 2005
SECURITIES AND EXCHANGE COMMISSION v. ERNESTO SIBAL, ET AL., Civil Action No. CV 05-3133 GPS (AJWx) (C.D. CA)(filed April 28, 2005)
COURT ENTERS FINAL JUDGMENTS AGAINST ERNESTO V. SIBAL, DOSEPH J. SHIN, CHAE HYON CHIN, BENJAMIN Y. CHIU AND PEJMAN SABET
SEC BARS SIBAL, SHIN AND CHIU FROM THE SECURITIES INDUSTRY
On July 22, 2005, the U.S. District Court for the Central District of California entered final judgments against Ernesto V. Sibal ("Sibal"), Doseph J. Shin ("Shin"), Chae Hyon Chin ("Chin"), Benjamin Y. Chiu ("Chiu") and Pejman Sabet ("Sabet'') based upon charges of insider trading. In its complaint, filed on April 28, 2005, the Commission alleged that, during 2002 and 2003, Shin and Robert Joo, a sixth defendant against whom the Commission's action continues, misappropriated material nonpublic information from the investment banks where they worked and tipped Sibal, Chin, Chiu and Sabet in advance of one or more of four separate merger transactions. The defendants used the misappropriated information to trade in the securities of one or more of the following companies: NCS Healthcare, Inc. ("NCS"), The DeWolfe Companies, Inc. ("DeWolfe"), Prime Retail, Inc. ("Prime Retail") and Airborne, Inc. ("Airborne"). The complaint alleged that during the course of these multifaceted and highly profitable insider trading schemes, the individuals who executed the trades shared certain of their illegal profits with, or paid kickbacks to, Shin and/or Joo. The Commission alleged that defendants, collectively, made in excess of $970,000 in illegal profits from these trading schemes.
Sibal, Shin, Chin and Chiu each also pled guilty to conspiring to commit securities fraud and wire fraud - offenses carrying a maximum penalty of five years imprisonment and a fine of up to approximately $2 million. All four defendants have agreed to pay full restitution to the victims of the offense. Joo has pled guilty to conspiracy to commit securities fraud and wire fraud, and conspiracy to obstruct SEC proceedings. Sibal and Chiu are scheduled to be sentenced August 22, 2005; Shin and Chin are scheduled to be sentenced September 19, 2005; and Joo will be sentenced October 24, 2005.
Without admitting or denying the allegations in the Commission's complaint, Sibal, Shin, Chin, Chiu and Sabet each consented to the entry of the final judgments, which permanently enjoin them from violating the antifraud provisions of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 14e-3 promulgated thereunder. The court has ordered defendants to pay a total of $1,111,515.23 in disgorgement, prejudgment interest and penalties:
Today, based on the entry of the Court's injunction, the Commission instituted settled administrative proceedings against Sibal, Shin and Chiu. Without admitting or denying the Commission's findings, each has consented to the entry of Commission orders, which bar Sibal and Shin from associating with any broker or dealer, and bar Chiu from associating with any broker, dealer or investment adviser. In the Matter of Ernesto V. Sibal and Doseph J. Shin, Administrative Proceeding File No. 3-12008 , Securities Exchange Act of 1934 Rel. No. 52223 (August 8, 2005); In the Matter of Benjamin Y. Chiu, Administrative Proceeding File No. 3-12007, Securities Exchange Act of 1934 Rel. No. 52222 (August 8, 2005). See also Litigation Release No. 19210 (April 28, 2005).
The Commission's investigation is continuing.