A former Ernst & Young partner has been given a prison sentence and a fine as a result of passing tips to his stockbroker girlfriend about acquisition targets that were clients of the firm.
The Securities and Exchange Commission (SEC) brought a case in a New York district court against James Gansman, who was an attorney and partner in E&Y’s transaction advisory services group at the US firm...
Gansman was charged with tipping off Donna Murdoch, who was a stockbroker and described as a ‘close friend’ about the identities of at least seven different acquisition targets of E&Y valuation services clients.
The complaint alleged that two of the seven acquisitions were tender offers; that Murdoch used Gansman’s tips to trade in the securities of all seven of the acquisition targets; and that Murdoch also tipped off her father, Gerald Brodsky, concerning one of the acquisitions and recommended trading in two of the acquisition targets to two other people; and, finally, that all three people then traded on Murdoch’s communications.
Gansman agreed to pay a fine of $250,000 to settle all the charges. Murdoch was also given a fine but payment was waived based on her demonstrated inability to pay. Both have also agreed to a separate final judgment that permanently enjoins each, respectively, from violating the securities laws.
In addition, Gansman has been given an SEC order which bars him from appearing or practicing before the commission as an attorney, while Murdoch is barred from association with any broker or dealer.
Gansman and Murdoch also faced a criminal trial relating to the same charges in 2009, which resulted in Gansman being sentenced to a year-and-a-day in prison and six months probation. He is currently in jail while Murdoch is awaiting sentencing. The SEC said its investigation of the matter is continuing.
News from: Accountancy Magazine
