Broker-Dealer Litigation - Greenberg Traurig LLP

Q.1.e.(i)
SEC v. Devlin, Litig. Release No. 21854, 2011 SEC LEXIS 539 (S.D.N.Y. Feb. 14, 2011); In re
Bowers, Release No. 63901, 2011 SEC LEXIS 632 (Feb. 14, 2011); In re Faulhaber, Release
No. 63902, 2011 SEC LEXIS 633 (Feb. 14, 2011); In re Glover, Release No. 63903, 2011 SEC
LEXIS 634 (Feb. 14, 2011).
The Commission accepted offers of settlement from Glover, who was affiliated with a
registered broker-dealer, Bowers, a registered representative of a dually registered broker-dealer
and investment adviser, Faulhaber, a registered representative of a registered broker-dealer, and
Holzer, a certified public accountant. In an earlier action brought by the Commission, a federal
district court entered final judgments by consent against these defendants. The Commission’s
complaint alleged that Devlin, a registered representative, traded on and tipped to others,
including Glover, Holzer, and Bowers, inside information about thirteen impending corporate
transactions. Holzer traded on the tips in at least three deals, and agreed with Devlin that he
would arrange for the purchase of shares for Devlin’s benefit, so that Devlin’s insider trading
could avoid detection. Bowers traded on the tips in five deals, and tipped his client, Faulhaber,
who then traded in three deals and paid kickbacks to Bowers. The final judgments permanently
enjoined the four defendants from future violations of Sections 10(b) and 14(e) of the Securities
Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The judgment against Glover
ordered him to pay disgorgement of $209,356, prejudgment interest of $55,390, and a $306,761
civil penalty. The judgment against Bowers ordered him to pay a $12,000 civil penalty. The
judgment against Faulhaber ordered him to pay disgorgement of $235,300, prejudgment interest
of $50,663, and a $235,300 civil penalty. The judgment against Holzer ordered him to pay
disgorgement of $52,922, prejudgment interest of $25,055.04, and a $172,269 civil penalty.
In a related criminal proceedings in federal district court, Bowers pleaded guilty to one
count of conspiracy to commit securities fraud and one count of securities fraud, and was
sentenced to three years of probation and ordered to pay $12,000 in disgorgement, a $15,000
fine, and $200 special assessment; and Faulhaber pleaded guilty to securities fraud, conspiracy to
commit securities fraud, and felonies involving moral turpitude, and was sentenced to five years
of probation and ordered to pay a $15,000 fine and over $119,300 in disgorgement. The
Commission barred Glover, Bowers, and Faulhaber from association, and suspended Holzer
from appearing or practicing before the Commission.
In re Malin, Release No. 64302, 2011 SEC LEXIS 1349 (Apr. 14, 2011)
Q.1.e(i)
The Commission accepted an offer of settlement from Malin, a consultant to and later the
CEO and Chairman of the Board of the parent company of a registered broker-dealer. In an
action brought by the Commission a federal court entered consent judgment against Malin,
permanently enjoining him from future violations of the anti-fraud provisions of the federal
securities laws, and from aiding and abetting violations of Section 15(c) of the Securities
Exchange Act of 1934. The Commission alleged that Malin participated in a scheme to
improperly obtain material confidential information from the broker-dealer’s squawk boxes to
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