SEC Charges Former Ernst & Young Partner and Friend With Insider Trading

FOR IMMEDIATE RELEASE
2008-101

Washington, D.C., May 29, 2008 — The Securities and Exchange Commission today charged a former partner at Ernst & Young LLP, his friend, and his friend's father in an insider trading scheme that resulted in nearly $600,000 in illicit profits.

The SEC's insider trading case alleges that from approximately summer 2006 through fall 2007, James E. Gansman, a former partner in Ernst & Young's Transaction Advisory Services department, tipped his friend Donna Murdoch about the identities of at least seven different acquisition targets of clients who sought valuation services from his firm. According to the SEC's complaint, Murdoch used the non-public information to trade in the securities of the target companies; to tip her father, who also traded; and to make recommendations to two others, who traded as well.

"This case underscores how important it is for deal advisers and due diligence providers retained by acquirers and their targets to respect the confidentiality of the information shared with them," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement.

According to the SEC's complaint, Gansman misappropriated the information about pending acquisitions on numerous occasions in breach of a duty of confidentiality owed to E&Y and its clients. Murdoch was a registered securities professional and managing director of a Philadelphia-based broker-dealer and investment banking firm. The complaint alleges that she used the non-public information provided by Gansman to tip her father, Gerald L. Brodsky, who also is named as a defendant, and to make recommendations to two others.

According to the complaint, Murdoch traded in the securities of at least seven companies based on the non-public information that they were acquisition targets of E&Y's clients, resulting in at least $392,035 in illegal profits. She provided information about one of the pending acquisitions, Freescale Semiconductor, Inc., to Brodsky, who traded on this information through a nominee account. His illegal profits totaled $63,400. The complaint alleges that Murdoch also recommended trading in the securities of two of the target companies, Freescale and ATI Technologies, Inc., to other individuals who traded for profits of $140,760.

The SEC complaint alleges that each of the three defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that defendants Gansman and Murdoch also violated Section 14(e) of the Exchange Act and Rule 14e-3 thereunder. The SEC seeks injunctions against future violations of the federal securities laws, disgorgement of unlawful trading profits with prejudgment interest, and civil monetary penalties.

The Commission acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, the Chicago Board of Options Exchange, the Options Regulatory Surveillance Authority, and the Financial Industry Regulatory Authority.

The Commission's investigation in this matter is ongoing.

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For more information, contact:

Cheryl Scarboro
Associate Director, SEC's Division of Enforcement
(202) 551-4403

C. Joshua Felker
Assistant Director, SEC's Division of Enforcement
202-551-4960

http://www.sec.gov/news/press/2008/2008-101.htm