Securities and Exchange Commission
Washington, D.C.
Litigation Release No. 17784 / October 10, 2002
Securities and Exchange Commission v. Lionel P. Thotam
02-CIV-5466 (ARL) (E.D.N.Y.)
SEC Sues Insider Trader Who Got Advance Business Week Magazine Information from U.S. Postal Worker
The Securities and Exchange Commission announced today that it filed a Complaint against Lionel P. Thotam of Lockport, Illinois for illegally trading on misappropriated information about fifty-one companies featured in the "Inside Wall Street" column of Business Week magazine. The Commission alleged that Thotam, then a New York City rent examiner, illicitly obtained the information from a postal worker friend who read the relevant portions of the magazine to him before public release, in violation of postal regulations. Thotam traded in the "Inside Wall Street" stocks for nearly two and a half years, reaping profits of $77,213.38.
The Commission also announced that it has reached a settlement with Thotam. Thotam has consented, without admitting or denying the allegations of the Commission's Complaint, to the entry of a final judgment that (1) permanently enjoins Thotam from future violations of Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and (2) orders Thotam to disgorge the $77,213.38 in profits and to pay prejudgment interest in the sum of $22,337.20 (subject to a credit for amounts he pays toward any restitution ordered in connection with parallel criminal charges to which he pled guilty today). The Commission has submitted the proposed final consent judgment to the United States District Court for the Eastern District of New York.
The Commission's Complaint alleges as follows:
From August 1996 through January 1999, Thotam used information misappropriated from Business Week magazine before its public release to execute in excess of sixty-four trades in the securities of fifty-one companies featured in forty-three IWS columns. Thotam improperly obtained this information from a friend employed by the United State Postal Service, who, at Thotam's request, read the column when the magazine passed through a Mount Vernon, New York postal sorting facility on its way to subscribers and news stands. The postal worker tipped the information to Thotam in violation of Postal Service confidentiality requirements. Thotam paid the postal worker $10,000 for the information. Thotam placed all of his purchase orders shortly before the close of the market on Thursday afternoons, before the magazine's release later that evening, and Thotam generally sold the shares the next day for total profits of $77,213.38. By these actions, Thotam violated the antifraud provisions of the Exchange Act.
The Commission acknowledges the assistance of the American Stock Exchange and the United States Attorney's Office for the Eastern District of New York.
SEC Complaint in this matter
http://www.sec.gov/litigation/litreleases/lr17784.htm
