U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20725 / September 18, 2008

SEC v. Mitchel S. Guttenberg, Erik R. Franklin, David M. Tavdy, Mark E. Lenowitz, Robert D. Babcock, Andrew A. Srebnik, Ken Okada, David A. Glass, Marc R. Jurman, Randi E. Collotta, Christopher K. Collotta, Q Capital Investment Partners, LP, DSJ International Resources Ltd. (d/b/a Chelsey Capital), and Jasper Capital LLC, C.A. No. 07 CV 1774 (S.D.N.Y) (PKC)

Seven Defendants Settle SEC Charges In Wall Street Serial Insider Trading Ring

The Securities and Exchange Commission announced today that on September 12, 2008, the Honorable P. Kevin Castel, United States District Judge for the Southern District of New York, entered final judgments against seven defendants — Robert D. Babcock, Mark E. Lenowitz, David A. Glass, Jasper Capital LLC, Randi E. Collotta, Christopher K. Collotta and Marc R. Jurman — in SEC v. Guttenberg, et al., C.A. No. 07 CV 1774 (S.D.N.Y.), an insider trading case the Commission filed on March 1, 2007. The Commission's complaint alleged illegal insider trading charges in connection with two related schemes in which Wall Street professionals serially traded on material, nonpublic information tipped, in exchange for cash kickbacks, by insiders at UBS Securities LLC and Morgan Stanley & Co., Inc.

The Commission's complaint alleged that from 2001 through 2006, Mitchel S. Guttenberg, an executive director in the equity research department of UBS, illegally tipped material, nonpublic information concerning upcoming UBS analyst upgrades and downgrades to two Wall Street traders, Erik R. Franklin and David M. Tavdy, in exchange for sharing in the illicit profits from their trading on that information. Both Franklin and Tavdy had downstream tippees who traded on the information including Babcock, Lenowitz, Glass and Jasper Capital. The complaint also alleged that from 2005 to 2006, Randi Collotta, an attorney who worked in the global compliance department of Morgan Stanley, together with her husband, Christopher Collotta, an attorney in private practice, tipped material, nonpublic information concerning upcoming corporate acquisitions involving Morgan Stanley's investment banking clients, to Marc Jurman, a registered representative in Florida, in exchange for sharing in his illicit trading profits. Jurman had several downstream tippees, including Babcock, who also traded on the information.

Without admitting or denying the allegations in the complaint, the following defendants settled the SEC's insider trading charges:

• Babcock, a former registered representative at Bear, Stearns & Co., Inc., consented to the entry of a final judgment that (i) permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933 ("Securities Act"); and (ii) orders him to pay disgorgement of $149,041. In a related administrative proceeding, Babcock consented to the entry of a Commission order barring him from future association with any broker, dealer, or investment adviser. In a parallel criminal case, Babcock previously pled guilty to charges of securities fraud and conspiracy to commit securities fraud. U.S. v. Robert Babcock, No. 1:07-CR-154 (S.D.N.Y.).

• Lenowitz, a former portfolio manager for Chelsey Capital, consented to the entry of a final judgment that (i) permanently enjoins him from violating Section 10(b) of the Exchange Act, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act; and (ii) orders him to pay disgorgement of $337,576. In a related administrative proceeding, Lenowitz consented to the entry of a Commission order barring him from future association with any investment adviser. In a parallel criminal case, Lenowitz previously pled guilty to charges of securities fraud and conspiracy to commit securities fraud. U.S. v. Mark Lenowitz, No. 1:07-CR-146 (S.D.N.Y.).

• Glass, a former registered representative at Assent LLC and the owner of Jasper Capital, consented to the entry of a final judgment that (i) permanently enjoins him from violating Section 10(b) of the Exchange Act, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act; and (ii) orders him, on a joint and several liability basis with Jasper Capital, to pay disgorgement of $2,751,366. In a related administrative proceeding, Glass consented to the entry of a Commission order barring him from future association with any broker or dealer. In a parallel criminal case, Glass previously pled guilty to charges of securities fraud and conspiracy to commit securities fraud. U.S. v. David Glass, No. 1:07-CR-159 (S.D.N.Y.).

• Jasper Capital, a day trading firm owned by Glass, consented to the entry of a final judgment that (i) permanently enjoins it from violating Section 10(b) of the Exchange Act, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act; and (ii) orders it, on a joint and several liability basis with Glass, to pay disgorgement of $2,751,366.

• Randi Collotta, a former compliance attorney at Morgan Stanley & Co., Inc., consented to the entry of a final judgment that (i) permanently enjoins her from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and (ii) orders disgorgement of $670,014, but waived payment based on her demonstrated inability to pay. In a related administrative proceeding, Randi Collotta consented to the entry of a Commission order barring her from future association with any broker, dealer, and investment adviser. Additionally, pursuant to Rule 102(e)(2) of the Commission's Rules of Practice, the Commission issued an order suspending Randi Collotta from appearing or practicing before the Commission as an attorney. In a parallel criminal case, Randi Collotta previously pled guilty to charges of securities fraud and conspiracy to commit securities fraud. U.S. v. Randi Collotta and Christopher Collotta, No. 1:07-CR-143 (S.D.N.Y.).

• Christopher Collotta, a former attorney in private practice, consented to the entry of a final judgment that (i) permanently enjoins him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and (ii) orders disgorgement of $4,500. In a parallel criminal case, Christopher Collotta previously pled guilty to charges of securities fraud and conspiracy to commit securities fraud. U.S. v. Randi Collotta and Christopher Collotta, No. 1:07-CR-143 (S.D.N.Y.).

• Jurman, a former registered representative at two broker-dealers in Florida, consented to the entry of a final judgment that (i) permanently enjoins him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and (ii) orders disgorgement of $38,685. In a related administrative proceeding, Jurman consented to the entry of a Commission order barring him from future association with any broker or dealer. In a parallel criminal case, Jurman previously pled guilty to charges of securities fraud and conspiracy to commit securities fraud. U.S. v. Marc Jurman, No. 1:07-CR-140 (S.D.N.Y.).

The Commission also announced that Laurence McKeever, a former general securities principal at Assent LLC, consented to a Commission order barring him from future association with any broker or dealer, based on his criminal conviction for conspiracy to commit securities fraud, wire fraud and commercial bribery. U.S. v. Samuel W. Childs, Jr. and Laurence McKeever, No. 1:07-CR-142 (S.D.N.Y.). In that case, McKeever pled guilty to charges that he accepted bribes from Glass and Tavdy in exchange for not reporting their illegal trading to Assent management.

The Commission acknowledges the assistance and cooperation of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.

For further information, see Litigation Release Nos. 20022 (March 1, 2007) and 20367 (November 20, 2007).

http://www.sec.gov/litigation/litreleases/2008/lr20725.htm