Tuesday, January 5, 2010
On December 17, 2009, the United States District Court for the Southern District of New York entered a final judgment against Ken Okada, the last remaining defendant in SEC v. Guttenberg, et al., C.A. No. 07 CV 1774 (S.D.N.Y.), an insider trading case the Commission filed against fourteen defendants on March 1, 2007. The Commission’s complaint alleged two related insider trading schemes in which Wall Street professionals serially traded on material, nonpublic information tipped, in exchange for kickbacks, by insiders at UBS Securities LLC and Morgan Stanley & Co., Inc. The complaint alleged that in the first scheme, from 2001 through 2006, Mitchel S. Guttenberg, an executive director in the equity research department of UBS, illegally tipped material, nonpublic information concerning upcoming UBS analyst upgrades and downgrades. The complaint alleged that in the second scheme, in 2005 and 2006, Randi Collotta, an attorney who worked in the global compliance department of Morgan Stanley, illegally tipped material, nonpublic information concerning upcoming corporate acquisitions involving Morgan Stanley’s investment banking clients. As alleged in the complaint, Okada was a downstream tippee in both schemes.
Okada consented to the entry of a final judgment which (i) permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and (ii) orders disgorgement of $327,191, but waives payment of all except $45,000 based on his demonstrated inability to pay. In a related administrative proceeding, Okada consented to the entry of a Commission order barring him from future association with any broker, dealer, or investment adviser. In a parallel criminal case, Okada previously pled guilty to charges of securities fraud and conspiracy to commit securities fraud and was sentenced to three years probation, a $300,000 fine, and forfeiture of $7,375.
Final judgments ordering injunctive relief, disgorgement, and/or civil penalties have now been entered against all fourteen defendants originally charged in this case. In related administrative proceedings, all ten individual defendants who worked in the securities industry (as well as two additional securities industry professionals who engaged in related misconduct) have been barred from future association with any broker, dealer and/or investment adviser. Additionally, in related criminal cases prosecuted by the U.S. Attorney’s Office for the Southern District of New York, all nine individual defendants (and two other individuals) have been convicted of felony charges and received sentences that have included forfeiture, fines, and/or prison terms.