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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
WITTENBERG MERGER SECURITIES INSIDER TRADING EXCHANGE COMMISSION SUN COMPLAINT GENERAL COUNSEL ATTORNEY NORTHERN DISTRICT CALIFORNIA CIVIL PROFITS PRICE CHARGES FORTE SOFTWARE MICROSYSTEMS MALCOLM UNITED STATES SAN FRANCISCO PRIOR ALLEGES PURCHASING STOCK PATENT SHARES ASSISTANCE NASD REGULATION MATTER |
SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16970 / April 18, 2001
Attorney Charged With Insider Trading in Merger of Forte Software and Sun
Microsystems
SECURITIES AND EXCHANGE COMMISSION v. MALCOLM B. WITTENBERG, United
States District Court for the Northern District of California, Civil
Action No. C 01 1477 MMC
The Securities and Exchange Commission ("Commission") today announced
that it has sued a San Francisco attorney for insider trading prior to
the August 1999 merger of Forte Software, Inc. ("Forte") and Sun
Microsystems, Inc. ("Sun"). The Commission's action alleges that
Malcolm Wittenberg learned about the merger while providing legal
services to Forte and then profited by purchasing Forte securities
before the merger announcement drove the price of Forte stock up
nearly 25%. In a related action, the United States Attorney's Office
for the Northern District of California today announced criminal
insider trading charges against Wittenberg based on his Forte trades.
Simultaneous with the filing of the Commission's civil complaint,
Wittenberg consented, without admitting or denying the allegations in
the Commission's complaint, to the entry of a permanent injunction
against future violations of Section 10(b) of the Securities Exchange
Act of 1934 and Rule 10b-5 thereunder, and to pay a total of
$29,224.67, including $14,000 in disgorgement of trading profits,
$1,224.67 in prejudgment interest and a civil penalty of $14,000.
According to the Commission's complaint, Wittenberg is a partner in
the San Francisco office of an Oakland, California-based law firm that
served as patent counsel to Forte. The complaint alleges that not
later than August 16, 1999, Forte's general counsel informed
Wittenberg that Forte was considering a merger with Sun. In connection
with the merger negotiations, Forte's general counsel directed
Wittenberg to provide information about Forte's patents to the
attorneys conducting due diligence for Sun. Forte's general counsel
also told Wittenberg that information about the proposed merger was
confidential.
Over the next several days, Wittenberg purchased 2,000 shares of Forte
common stock at an average price of $14.125 per share. After the
merger was announced on August 23, 1999, Forte closed at $21.125 per
share, up 24.2% from its prior day closing price. Although Wittenberg
retained his Forte shares after the announcement, Wittenberg's profits
from his illegal insider trading were $14,000.
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