SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17505 / May 7, 2002
SECURITIES AND EXCHANGE COMMISSION v. STEVEN S. GOLDBERG, 02 Civ. 3488 (JES) (S.D.N.Y.)
The Securities and Exchange Commission announced today that it filed a civil injunctive action in federal court in Manhattan, charging an attorney and former stock broker with illegal insider trading by purchasing Home Port Bancorp, Inc. ("Home Port") stock in July 2000 while in possession of material, nonpublic information concerning an impending merger involving Home Port. Among other relief, the defendant consented to a civil penalty that is equal to two times the amount of his illegal trading profits.
Named in the Commission's complaint is Steven S. Goldberg ("Goldberg"), age 58, an attorney admitted to the New York State Bar, and a registered representative from 1987 until 2001 associated with MML Investors Services, Inc., a registered broker-dealer and wholly owned subsidiary of Massachusetts Mutual Life Insurance Company.
The Commission's complaint alleges that:
STEVEN S. GOLDBERG engaged in illegal insider trading by purchasing Home Port Bancorp, Inc. ("Home Port") stock while in possession of material, nonpublic information concerning an impending merger involving Home Port. In mid to late May, Home Port's management agreed upon the essential terms of a merger with Seacoast Financial Services Corporation. On or around June 7, 2000, Goldberg met with a longstanding client who was an officer of Home Port to provide legal advice. At that meeting, the client communicated to Goldberg that: (i) Seacoast had agreed to acquire Home Port for $37 per share in cash; (ii) the client would receive a large sum of money as a result of the transaction; (iii) Goldberg needed to know about the transaction because he was doing estate work for the client; and (iv) the transaction was going to be completed. On July 18, 2000 Goldberg purchased 2,000 shares of Home Port common stock, and caused a trust account maintained for the benefit of his mother to purchase 1,000 shares of Home Port, despite having been warned by his client that the information was confidential. The merger was announced on July 21, 2000 and Home Port stock rose over 40 percent. By purchasing Home Port stock in advance of the merger announcement, Goldberg illegally profited $28,546.
Simultaneous with the filing of the complaint, Goldberg consented, without admitting or denying the allegations in the complaint, to the entry of a final judgment: (1) permanently enjoining him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (2) ordering him to disgorge $28,546 in illegal profits and to pay prejudgment interest of $3,553; and (3) ordering him to pay a civil penalty of $57,092, which represents two times the amount of his illegal profits. The Commission will also institute an administrative proceeding to which Goldberg has consented, barring him from association with a broker or dealer. The Commission considers the conduct alleged in this case to be especially egregious particularly considering the defendant's breach of his professional obligations.