SEC Accuses Pennsylvania Attorney of Insider Trading
The U.S. Securities and Exchange Commission is charging Herbert K. Sudfeld with insider trading ahead of the announcement that Nationwide Mutual Insurance Company and Harleysville were about to merge in a $760 million deal. The regulator contends that the Pennsylvania attorney illegally traded on the information, which caused Harleysville’s stock price to rise 87% when the announcement went public.
Sudfeld, who was a real estate partner at a law firm that gave Harleysville counsel on the merger, learned about the impending deal from a conversation involving a lawyer and the legal assistant they shared. That attorney was involved in the deal.
Sudfeld is accused of stealing the information and buying Harleysville stock. After the merger was announced, he purportedly sold the share he had bought, making about $79,000 in illegal profits. Prosecutors in Pennsylvania have filed a parallel criminal action against him.
San Diego Investment Adviser Accused of Stealing Client Money, Running Ponzi Scam
Paul Lee Moore and his now defunct investment advisory firm are charged with bilking client funds and operating a Ponzi scheme. According to the complaint filed by the SEC, Moore and Coast Capital Management raised $2.6 million from clients, and he allegedly siphoned almost $2 million for his personal spending.
The regulator said that Moore took the rest of the money and, in Ponzi scam-fashion, paid earlier clients with funds brought in by new clients. He is accused of sending out bogus account statements to clients, as well as sharing these statements with prospective clients. The California investment adviser purportedly lied about his educational background, employment history, as well as about how much Coast Capital managed in assets.
The U.S. Attorney’s Office for the Southern District of California has filed its own case consisting of criminal charges against Moore.
New York-Based Operators Allegedly Bilked Clients That Bought Charitable Gift Annuities
In a New York district court, the SEC is accusing James P. Giffin, James Wolle, and eight companies of bilking investors. The regulator says that those named raised at least $8 million from at least 125 investors. The money was for promissory notes and shares that the companies had issued over several years.
The regulator claims that Giffin, who is the CEO and founder of 54Freedom Inc., and Wolle, who is the company’s treasurer and CFO, misled potential investors about the prospects of several companies, all of which were also named in the complaint. Giffin is also accused of selling supposed charitable gift annuities that he claimed were backed by respected insurance companies and diverting over $1 million of investor money to cover personal and corporate spending.
The two men and the companies are charged with securities law violations. Meantime, prosecutors in the state of New York have filed a parallel criminal action. Giffin was arrested and charged with money laundering and fraud.
The SEC Case in New York (PDF)