U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23935 / September 13, 2017
Securities and Exchange Commission v. Lawrence F. Cluff, Jr., Roger E. Shaoul, and James Shaoul, Civil Action No. 17-CV-2460 (S.D.N.Y.)
SEC Charges Alleged Tipper in Insider Trading Case Involving Intel-Mobileye Merger
The Securities and Exchange Commission has filed an amended complaint naming James Shaoul as an additional defendant in an insider trading case the agency filed earlier this year against his brother and another trader who allegedly profited by more than $925,000 trading in advance of a merger between technology companies Intel Corporation and Mobileye N.V.
The SEC's amended complaint alleges that James Shaoul has professional and personal relationships with Mobileye founders who directly participated in negotiations that resulted in Intel's tender offer. Mobileye is a software and technology developer for Advanced Driver Assistance Systems used for autonomous driving.
Shaoul allegedly tipped his brother Roger E. Shaoul with nonpublic information about the impending merger prior to the public announcement, and gave him detailed directions to buy specific Mobileye options. The directions allegedly included specific purchase prices, strike prices, and expiration dates as well as a price per share discussed in confidential Mobileye-Intel discussions and an estimated date range for a public announcement.
Roger Shaoul allegedly then tipped Lawrence F. Cluff Jr. with nonpublic information about the tender offer, saying his family knew Mobileye's founders and they were recommending that friends and family invest in the company. All of the suspicious trading allegedly occurred in two accounts held in Cluff's name, including an account that had been dormant since 2011 before Cluff purchased Mobileye stock on Jan. 30, 2017.
According to the SEC's amended complaint, James Shaoul resides in Israel where Mobileye's principal offices are located. Shaoul is a physician specializing in nonsurgical cosmetic procedures, including botox and laser hair removal. A Mobileye director and his wife have received treatment at Shaoul's clinic.
Roger Shaoul and Cluff reside in Virginia, according to the SEC's complaint. The SEC filed the initial complaint against them in April 2017.
The SEC's amended complaint charges all three defendants with violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The Commission is seeking a final judgment ordering Roger Shaoul and Cluff to disgorge their allegedly ill-gotten gains with interest and ordering all defendants to pay penalties and be permanently enjoined from future violations.
The SEC's investigation is being conducted by Kevin M. Comeau, Daniel M. Konosky and Jay A. Scoggins of the Denver Regional Office, and supervised by Kurt L. Gottschall and Julie K. Lutz. The litigation is being handled by Terry R. Miller, Stephen C. McKenna, and Greg A. Kasper.