Insider Trading Roundup: Lawson Software Founders Pay $5.8M to Settle SEC Allegations, Three Sales Managers Face SEC Charges, and Kentucky Mayor Will Turn Over Illicit Profits

Lawson Software Founders Resolve SEC Insider Trading Case
Richard Lawson, his brother William, and John Cerullo have agreed to pay $5.8 million to resolve U.S. Securities and Exchange Commission allegations that they engaged in insider trading prior to the merger between Lawson Software Inc. and two companies: Info Global Solutions and a Golden Gate Capital affiliate. The three men founded the software company.

According to the insider trading case, Richard tipped William and Cerullo that despite media and analyst reports the company was not the focus of a bidding war. This resulted in their selling of 1.8 million in company shares at prices that were inflated because of the speculation. They purportedly made illicit profits of $2 million when they sold the shares.

Now, Richard has consented to pay a $1.56 million fines. William, the former CEO of Lawson Software, will pay $3.87 million. Cerullo will pay $374,000. By settling, they are not denying or admitting to the securities fraud charges.

Three Ex-Qualcomm Inc. Sales Managers Face Insider Trading Charges
The SEC is charging Robert Herman, Derek Cohen, and Michael Fleischli with engaging in insider trading . The three men were former sales managers at Qualcomm Inc.

They are accused of buying stock in Atheros Communications securities after finding out during a sales meeting that their employer was negotiating to acquire Atheros. When the two companies finally announced the deal, the three men sold their securities and profited.

The regulator says that Cohen made over $200,000 in illegal profits, while Herman profited $30,000 and Fleischli made $3,000. They are charged with violating the Securities and Exchange Act of 1934’s Section 10(b) and Rule 10b-5. U.S. Attorney’s Office for the Southern District of California has filed a parallel action against Herman and Cohen to announce criminal charges.

Ft. Mitchell, Kentucky Mayor To Pay Penalty and Turn over Insider Trading Profits
Chris Wiest, the mayor of Fort Mitchell, Kentucky, has resolved the SEC insider trading allegations. He is accused of buying 35,000 shares of InfoLogix stock because he received information that the company was going to be acquired by Stanley Black & Decker. At the time, Wiest was an attorney involved in the deal, which had not been announced yet. In December 15, 2010, Stanley purchased InfoLogix for $61 million.

The SEC says that Wiest purchased the common stock in his brokerage account for his retirement plan, paying prices from $1.95 to $2.84 over a period of nearly two months prior to the deal. He sold a significant number of shares a day after news of the acquisition was made public.

By settling Wiest is not denying or admitting to the charges. He will pay back the $56,292 he made in trading profits plus prejudgment interest and a penalty.

SEC v. Cohen, Fleischli, and Herman (PDF)

SEC v. Lawson, Lawson, and Cerullo (PDF)

In the Matter of Christopher Wiest, Respondent (PDF)

More Blog Posts:
Jury Says Wyly Brothers From Texas Committed Fraud, Stockbroker Fraud Blog, May 14, 2014

Former Morgan Stanley Broker and Two Others Allegedly Ran $5.6M Insider Trading Scam, Swallowed The Information, Stockbroker Fraud Blog, March 19, 2014
SAC Capital Advisors LP Expected to Plead Guilty to Insider Trading Criminal Charges, Institutional Investor Securities Blog, October 31, 2013