Two Charged With Insider Trading Related to Stern Move to Sirius

Two Charged With Insider Trading Related to Stern Move to Sirius
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Two Charged With Insider Trading Related to Stern Move to Sirius

The Securities and Exchange Commission said it filed and settled insider trading charges against two individuals, an accountant and a former executive of Sirius Satellite Radio, who illegally profited from advance knowledge of Howard Stern's $500 million contract with Sirius. Without admitting or denying the SEC's allegations, Gary Herwitz, a certified public accountant and former president of the accounting firm Mahoney Cohen & Company, agreed to pay $52,000, and former Sirius executive vice president Tracey Stanyer agreed to pay $35,000 to settle the charges. The judgment against Stanyer also bars him from acting as an officer or director of a public company.
The SEC's complaint filed in federal court in Manhattan alleges that on Sept. 30, 2004, Herwitz bought 25,000 Sirius shares at $3.19 a share after learning in confidence from a colleague at Mahoney Cohen, Stern's accountant, that the DJ had received an offer from Sirius and that the parties were negotiating. Between Nov. 19, 2004, and Jan. 10, 2005, the SEC alleges, Herwitz sold 22,500 of those Sirius shares for a profit.
In the complaint, the SEC also alleges in early September 2004, Stanyer learned from a senior Sirius executive that company executives were in negotiations with Stern and he was cautioned that the negotiations were confidential.
On or about Oct. 5, 2004, Stanyer learned from the same executive that Sirius had signed an agreement with Stern, states the SEC in the complaint. On Oct. 5, 2004, Stanyer bought 29,120 Sirius shares at prices ranging between $3.28 and $3.32 a share. The contract was announced the next day. On Oct. 7 and 8, 2004, Stanyer sold his 29,120 Sirius shares for a profit.
"It is particularly troubling when accountants or corporate executives, who are entrusted with confidential information, believe they can illegally trade on such information with impunity," said Mark Schonfeld, director of the SEC's Northeast Regional Office. "This action demonstrates that illegal insider traders should expect a comprehensive and rigorous enforcement response."