Thursday, June 14, 2007

Former Law Firm Managing Partner Settles Insider Trading Case

The former managing partner at Katten Muchin Rosenman's D.C. office, David A. Schwinger, settled an SEC civil enforcement action alleging insider trading in Vastera,  Inc.  According to the complaint (here), Schwinger learned about an impending merger of Vastera when he interviewed the company's general counsel, who was seeking a new job because of the transaction.  Schwinger bought 10,000 shares and made a profit of a shade over $13,000 after the announcement of the deal.  According to the complaint, Schwinger violated a duty of trust and confidence he owed to Katten Muchin to maintain the confidentiality of firm information, especially because Vastera was a client of the firm.  The case shows how hard the SEC is pushing insider trading cases these days.  Schwinger settled the action by disgorging his profits, prejudgment interest, and a double penalty based on the profits.  Lawyers certainly pay a price for trading on inside information far beyond the amount at issue.  Whether the D.C. Bar will impose sanctions on Schwinger for possible misuse of confidential firm information remains to be seen. (ph)

Civil Enforcement, Insider Trading, Securities | Permalink

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