U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20432 / January 17, 2008

SEC v. Morris Gad and Nathan Rosenblatt, 07-CV-8385 (GEL) (S.D.N.Y.)

SEC Settles Civil Injunctive Action Against Morris Gad

The Commission announced that a final judgment was entered on January 15, 2008, by the United States District Court for the Southern District of New York against Morris Gad, an officer and principal shareholder of Almod Diamonds, Inc., a family-owned jewelry retailer. Gad consented to the entry of final judgment, without admitting or denying the allegations of the Commission's complaint, except as to jurisdiction.

The Commission's Complaint

The complaint, which was filed September 27, 2007, alleges that Nathan Rosenblatt, a former director of NBTY, Inc., and member of its three-person audit committee, tipped his close friend Gad with material, nonpublic information concerning the company's significant revenue and earnings shortfall for the third quarter of 2004, prior the company's public release of its financial results. With this information in hand, Gad sold his entire position of NBTY stock, sold the stock short, purchased put contracts, and sold call contracts through the custodial accounts of his three children prior to NBTY's release of its 2004 third quarter financial results. In so doing, Gad made approximately $400,000 in trading profits and losses avoided.

The Commission's complaint charges Rosenblatt and Gad with violating Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rule 10b-5.

The Settlement

The final judgment against Gad permanently enjoins Gad from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5 and Section 17(a) of the Securities Act, orders him to disgorge $399,187.40, representing profits earned and losses avoided in trading NBTY shares, to pay prejudgment interest of $97,718.87, and to pay a civil penalty of $399,187.40.

For further information, see Litigation Release No. 20305 (September 27, 2007).