Lanexa Management LLC to Pay $746,797 in Insider Trading Profits

Jack Humphrey, Regulatory journalist
March 22, 2012 /

The Honorable Richard J. Sullivan of the United States District Court for the Southern District of New York, entered a final judgment against Relief Defendant Lanexa Management, LLC in SEC v. Thomas C. Hardin and Lanexa Management, LLC, an insider trading case the SEC originally filed on November 12, 2010.

As alleged in the SEC’s amended complaint, filed on March 16, 2012, Defendant Thomas C. Hardin, a former managing director at Lanexa Management, engaged in insider trading on behalf of a Lanexa hedge fund ahead of the announced acquisition of 3Com Corp. in September 2007, resulting in more than $600,000 in illegal trading profits.

The SEC’s amended complaint alleged that Arthur Cutillo and Brien Santarlas, two former attorneys with the law firm of Ropes & Gray LLP, misappropriated from their law firm material nonpublic information concerning the acquisition of 3Com, and tipped the inside information, through another attorney, to Zvi Goffer, a former proprietary trader at Schottenfeld Group LLC, in exchange for kickbacks.

The SEC further alleged that Goffer tipped the inside information to, among others, Gautham Shankar, a fellow proprietary trader at Schottenfeld, who then tipped Hardin, a managing director at Lanexa. As alleged in the amended complaint, Hardin used the inside information to trade in the securities of 3Com on behalf of a Lanexa hedge fund.

To settle the SEC’s action, Lanexa agreed to a final judgment ordering it, as a relief defendant, to disgorge $612,190 in illicit trading profits, plus prejudgment interest of $134,607.

Hardin previously consented to a judgment in this case and pled guilty to charges of securities fraud and conspiracy to commit securities fraud in a related criminal case, United States v. Thomas Hardin, 10-CR-339 (S.D.N.Y.). See Lit. Rel. No. 21999 (June 14, 2011).

 

Share your opinion