On April 17, the U.S. District Court for the Western District of Pennsylvania entered Final Judgments against Joseph J. Queri, Jr.and Kyle D. Kaczowski in two separate district court cases. The Commission charged them, and fourteen other defendants, with insider trading in advance of Dick's Sporting Goods Inc.'s June 21, 2004 announcement that it intended to acquire Galyan's Trading Company, Inc. via a tender offer. Queri Jr. and Kaczowski agreed to the judgments. The Commission has now settled with eleven of the sixteen defendants. The complaints, which the SEC filed on September 30, 2008, alleged:
Queri, Jr., who was Dicks' Senior Vice President of Real Estate, tipped his close friend, Gary Gosson, and his father, Joseph Queri, Sr., about the acquisition.
Gosson, a resident of Syracuse, New York, tipped nine friends who all bought shares of Galyans stock. Gosson traded through Defendant Gary Camp's brokerage account and shared profits with Michael Santaro and Joseph Federico. These four defendants collectively profited $218,027.
Queri, Sr., a resident of Las Vegas, Nevada, tipped six friends, including Kaczowski. Kaczowski traded and profited $20,193.00. He also tipped two friends who bought Galyans stock and profited a total of $9,940.00.
The trading connected to Queri, Jr.'s tips resulted in over $600,000 in illegal trading profits.
The day after the public announcement, Galyan's stock closed at $16.68, a 50.3% increase from the previous day's closing price of $11.10.
Without admitting or denying the allegations in the complaint, Queri, Jr. and Kaczowski consented to the entry of a Final Judgment in which they are permanently enjoined from future violations of the antifraud provisions of the securities laws, Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. Queri, Jr. also agreed to pay disgorgement of $1.00, to preserve the Commission's ability to establish a fair fund, and to pay a one-time civil penalty for tipping in the amount of $218,026.00. Kaczowski agreed to pay disgorgement of $20,193.00, plus prejudgment interest of $6,661.07, and a civil penalty for trading and tipping two friends in the amount of $30,133.00.
FINRA is proposing a major expansion of its BrokerCheck service — to make records of final regulatory actions against brokers permanently available to the public, regardless of whether they continue to be employed in the securities industry. Under current rules, a broker's record generally becomes unavailable to the public two years after he or she leaves the securities industry and is therefore no longer under FINRA's jurisdiction. BrokerCheck is a free online service through which investors can instantly see the employment, qualifications and disciplinary history of more than 650,000 brokers under FINRA's jurisdiction. FINRA estimates there are more than 15,000 individuals who have left the securities industry after being the subject of a final regulatory action and whose disciplinary history is not currently available on BrokerCheck.
FINRA filed its rule proposal to expand BrokerCheck with the Securities and Exchange Commission (SEC) late last week. The SEC will publish the proposal in the Federal Register and solicit public comment in the near future.
In 2008, individuals used BrokerCheck to conduct 11.6 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999.
SETON HALL LAW REVIEW Symposium
October 30, 2009
Seton Hall Law School
Securities Regulation and the Global Economic Crisis: What Does the Future Hold?
CALL FOR PAPERS
The SETON HALL LAW REVIEW will be hosting a Symposium on October 30, 2009, at Seton Hall Law School in Newark, NJ, to address the role of securities regulation in the current global financial crisis. Specifically, this event will examine the origins and genesis of the crisis, address the future of securities regulation domestically and internationally, and attempt to anticipate the role of government agencies, self-regulatory organizations, and private market participants in shaping and effectuating regulation. This Symposium will bring together experts from both public and private sectors, as well as from the legal and academic communities, to explain, debate, and assess the challenges and opportunities presented by the current and prospective landscape of global securities regulation.
Persons interested in participating as a speaker and/or in publishing a piece in the special Symposium issue of the SETON HALL LAW REVIEW should submit a CV and a 200-word abstract of their presentation to Laura Fant, Symposium Editor, by May 15, 2009. Laura Fant may be reached at (617) 480-7428 / Laura.Fant@student.shu.edu. Prospective speakers or panelists should indicate whether they would be interested in submitting a paper based on their presentation for publication. Contributions are welcome from scholars and practitioners in all disciplines.