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Univ. of Toledo College of Law

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Monday, November 21, 2011

Former E&Y Accountant Settles Insider Trading Charges Involving Vivendi Acquisition

The SEC settled charges against Mark A. Konyndyk, CPA, for insider trading in advance of a tender offer. The SEC alleged that Konyndyk, a former manager in the Transaction Advisory Services Group of Ernst & Young (“E&Y”), learned through his work at E&Y that Activision, Inc. was the target of highly confidential acquisition talks, code-named “Project Sego,” in which Vivendi S.A. was the potential acquirer. In particular, Konyndyk performed due-diligence work on Project Sego for E&Y’s client, Vivendi, billing 36 hours to the engagement. Both before and shortly after his departure from E&Y’s employ on November 2, 2007, including just days before the December 2, 2007, public announcement of the Vivendi-Activision merger, Konyndyk bought Activision out-of-the-money call options with near-term expirations. He sold the options shortly after the public announcement, earning gross profits of $9,725.

Without admitting or denying the allegations, Konyndyk has agreed to settle the Commission’s allegations against him. The final judgment to which Konyndyk consented would order that he is liable for disgorgement of $9,725 (comprising all the profits flowing from his own illegal trading) plus $1,789.28 in prejudgment interest thereon as well as a $9,725 civil penalty, but allow him one year to pay the foregoing sums. Additionally, Konyndyk consented, in related administrative proceedings, to the entry of a Commission order that would suspend him, pursuant to Commission Rule of Practice 102(e), from appearing or practicing before the Commission as an accountant, with a right to seek reinstatement after two years. If approved by the Court, this settlement would fully resolve this case.

http://lawprofessors.typepad.com/securities/2011/11/former-ey-accountant-settles-insider-trading-charges-involving-vivendi-acquisition.html

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