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1
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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
SECURITIES GTI PROFITS EXCHANGE COMMISSION CIVIL PENALTY COMPLAINT ALLEGES STEVAN DISTRICT TRADING SANDOZ TENDER JUDGEMENT PAY DISGORGEMENT PREJUDGMENT NEGOTIATIONS ACCOUNT RECOMMENDATIONS FIANCEE PARTNERSHIP BIRNBAUM PURCHASED GTI PURCHASED GTI STOCK PERSONAL ACCOUNT TRUST ACCOUNTS BIRNBAUM RECEIVED UNLAWFUL TRANSACTIONS PRIVATE INVESTMENT PARTNERSHIP SETTLING MATTER |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 16074 / March 2, 1999
SEC v. Stevan A. Birnbaum, Civil Action No. 99-02209ER
(AJX)(C.D. Cal. March 2, 1999)
The Securities and Exchange Commission today filed an
injunctive action against Stevan A. Birnbaum in the U.S.
District Court for the Central District of California. The
complaint alleges that Birnbaum engaged in insider trading
in advance of a July 1995 announcement that Sandoz, Ltd. was
making a cash tender offer for the securities of Genetic
Therapy, Inc. Without admitting or denying the allegations
of the complaint, Birnbaum consented to the entry of a final
judgment permanently enjoining him from violating Sections
10(b) and 14(e) of the Securities Exchange Act of 1934 and
Rules 10b-5 and 14e-3 thereunder. The final judgment
requires Birnbaum to pay a total of $307,720, including
disgorgement, prejudgment interest and a civil penalty.
The complaint alleges that when Sandoz and GTI were
engaged in nonpublic preliminary merger negotiations,
Birnbaum received material nonpublic information regarding
the negotiations from a GTI board member on a confidential
basis. Between May 30, 1995 and July 7, 1995, only days
before the public announcement of Sandoz's tender offer for
GTI's securities, Birnbaum purchased GTI stock for his
personal account, and in his children's trust accounts.
Birnbaum received unlawful trading profits of $83,528 for
these transactions. In addition, Birnbaum recommended GTI
to his fiancee and a private investment partnership in which
Birnbaum held a 8.5% interest. Birnbaum's recommendations
resulted in profits of $92,548. In settling this matter,
Birnbaum has agreed to disgorge his own profits, the profits
of his fiancee and the partnership, and to pay prejudgment
interest of $48,116 and a civil penalty of $83,528.
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