SEC Sues Broker Alleging Insider Trades Tied to Galleon
The U.S. Securities and Exchange Commission accused a former broker at Incremental Capital LLC of insider trading in an action tied to the case of former Galleon Group LLC trader Zvi Goffer.
Eric Rogers, 31, of Oceanside, New York, then a proprietary trader at Spectrum Trading LLC, a registered broker-dealer in New York, the SEC alleged in federal court in Manhattan. In August and September 2007, Rogers traded ahead of the announcement of the corporate acquisition of 3Com Corp., using nonpublic information obtained by Brien Santarlas and Arthur Cutillo, then lawyers at the Boston-based law firm Ropes & Gray LLP, the agency said yesterday in its complaint.
The case has been settled, John Nester, a spokesman for the agency said. While terms of the settlement weren’t immediately available on the SEC’s litigation website yesterday, the accord includes Rogers not having to pay any fine and agreeing to be barred from working in the financial industry, his lawyer said.
“We have resolved this case on the grounds that Mr. Rogers has no money and is no longer working on Wall Street,” Joseph Ryan, a lawyer for Rogers, said in a telephone interview.
In exchange for kickbacks, Cutillo and Santarlas passed the information that affiliates of Bain Capital Partners LLC would acquire 3Com, the SEC alleged. Using Cutillo’s college roommate, Jason Goldfarb, as a conduit, the two lawyers passed the tip to Zvi Goffer, a former proprietary trader at Schottenfeld who then passed the tips to his brother Emanuel, Rogers and others, the SEC said.
Rogers allegedly purchased shares of 3Com in August and September 2007, earning illicit profit of almost $207,000, the SEC said.
Zvi Goffer, 35, later founded Incremental Capital after he was fired from Galleon, his lawyer told jurors at his 2011 trial. While the SEC alleges that the insider-trading occurred while Rogers was at Spectrum, records for the Financial Industry Regulatory Authority indicate that Rogers worked at Incremental between August and November 2009.
Zvi Goffer and his brother, Emanuel, were convicted of federal insider-trading charges along with Michael Kimelman the co-founder of Incremental Capital, in a 2011 trial in federal court in New York. The Goffers and Kimelman were sentenced to prison. Santarlas, Goldfarb and Cutillo all pleaded guilty and were sentenced to prison.
The case is U.S. v. Rogers, 1:13-cv-00374, Southern District of New York (Manhattan).
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