U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19383 / September 19, 2005
SECURITIES AND EXCHANGE COMMISSION v. STANFORD COHEN, Civil Action No. 05-CV-4976 (E.D.Pa.)
SEC CHARGES STANFORD COHEN WITH INSIDER TRADING IN THE SECURITIES OF BED BATH & BEYOND, INC.
COHEN AGREES TO PAY $138,800 TO SETTLE CHARGES
On September 19, 2005, the Securities and Exchange Commission (Commission) filed an insider trading complaint against Stanford Cohen, 63, a resident of Marlton, New Jersey, in the United States District Court for the Eastern District of Pennsylvania alleging that in 2001 and 2002 Cohen illegally purchased and tipped others to purchase the securities of Bed Bath & Beyond, Inc. (Bed Bath & Beyond) after learning material nonpublic information about Bed Bath & Beyond's positive earnings and revenues. Without admitting or denying the allegations in the complaint, Cohen consented to the entry of a Final Judgment, subject to the court's approval, in which he is permanently enjoined from further violations of the antifraud provisions of the federal securities laws and ordered to pay disgorgement of his and his tippees' trading profits, plus prejudgment interest, and a one time civil penalty all totaling $138,800.
The Commission's complaint alleges that prior to Bed Bath & Beyond's positive earnings announcements on September 25, 2001, April 3, 2002, June 20, 2002, and December 18, 2002, Cohen received nonpublic earnings and revenue information from a Bed Bath & Beyond employee with whom he had a relationship of trust and confidence (the Employee). The Employee is an accountant at Bed Bath & Beyond who had access to Bed Bath & Beyond's earnings and revenue information prior to its public dissemination. On the basis of the information he received from the Employee, Cohen effected unlawful trades in his own brokerage accounts, his wife's account, his business' accounts, and his business partner's account prior to these public announcements. Further relying on that information, Cohen tipped a friend, relatives, and his broker who also purchased Bed Bath & Beyond stock prior to the public dissemination of the earnings information.
The Commission's complaint further alleges that the market reacted to Bed Bath & Beyond's earnings announcements on September 25, 2001, April 3, 2002, June 20, 2002, and December 18, 2002. The price of Bed Bath & Beyond stock rose 10%, 7%, 5% and 4.5%, respectively, from the close of trading on the days before the announcements to the close of trading on the days after the announcements. Cohen and his friend, relatives, broker, and a client of his broker, collectively profited by $63,795, by selling the Bed Bath & Beyond stock that they bought prior to the earnings announcements after the announcements at higher prices than what they paid for the stock.
The Commission's complaint alleges that Cohen's purchases and tips to purchase Bed Bath & Beyond stock prior to the public announcements violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.