SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16939 / March 22, 2001
NEW YORK ATTORNEY AGREES TO PAY $50,000 TO SETTLE SEC COMPLAINT
ARISING FROM SCHEME TO OBTAIN CONFIDENTIAL INFORMATION ON CORPORATE
TAKEOVERS
Civil Action No. 00 Civ. 8822
The Securities and Exchange Commission has agreed to settle a pending
civil action against Robert C. Schuster, a White Plains attorney, who
was charged by the SEC with securities fraud for attempting to bribe a
paralegal at Skadden, Arps, Slate, Meagher & Flom to give him
confidential information about upcoming mergers involving Skadden's
clients. In its complaint, the SEC alleged that Schuster sought to
profit by buying stock in the acquisition targets before public
announcement of the merger.
Under the terms of the settlement, Schuster has consented, without
admitting or denying the allegations of the complaint, to the entry of
a permanent injunction enjoining him from future violations of the
antifraud provisions of the securities laws and ordering Schuster to
pay a civil penalty of $50,000.
Schuster is an attorney with a solo practice in White Plains. He was
formerly an assistant district attorney in Cayuga County, New York.
Skadden is a prominent New York based law firm that is known for
specializing in representing large corporations involved in mergers
and acquisitions. Schuster had been representing the paralegal in
connection with a personal legal matter when he learned that the
paralegal worked at Skadden.
The Commission's complaint alleges that, in September of this year,
Schuster offered the Skadden paralegal up to $15,000 to provide him
with confidential information about upcoming mergers involving Skadden
clients. In a subsequent meeting in October, which was recorded by the
FBI, Schuster told the paralegal that they could "mutually benefit"
from the confidential information because he would give the paralegal
a "cut" of his profits. Schuster explained that "(t)he whole strategy
has to be to know something before anyone else does."
On October 26, 2000, under the supervision of an FBI agent, the
paralegal gave Schuster a fictitious tip - the name of a company that
would purportedly be acquired and whose stock price would rise
substantially when publicly announced. Schuster immediately bought
3,000 shares in the company for $153,750, nearly two-thirds of his
entire brokerage account. Based on the fictitious tip, Schuster
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
NEW YORK ATTORNEY AGREES TO PAY $50,000 TO SETTLE SEC COMPLAINT ARISING FROM SCHEME TO OBTAIN
Civil Action No. 00 Civ.
The Securities and Exchange Commission has agreed to settle a pending civil action against
In its complaint, the SEC alleged that Schuster sought to profit by buying stock in the
Under the terms of the settlement, Schuster has consented, without admitting or denying the
Schuster is an attorney with a solo practice in White Plains.
Skadden is a prominent New York based law firm that is known for specializing in representing
The Commission's complaint alleges that, in September of this year, Schuster offered the
In a subsequent meeting in October, which was recorded by the FBI, Schuster told the
On October 26, 2000, under the supervision of an FBI agent, the paralegal gave Schuster a
Schuster purchased stock and stock options in the company that was the purported acquisition
After Schuster paid the paralegal $500 cash as an initial installment for the tip, the FBI
The Commission charged Schuster with committing securities fraud in violation of Section 10of
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