SEC Charges Florida Investment Adviser a Second Time for Insider Trading
The Securities and Exchange Commission today filed insider trading charges against Charles Rustin Holzer, a family office executive and former broker who last year settled SEC charges that he traded in options of Dun & Bradstreet Corp. (DNB) on inside information. The SEC’s latest complaint alleges that, in addition to the options trades that were the subject of the SEC’s prior lawsuit, Holzer also placed unlawful trades in DNB stock through offshore accounts that were not disclosed to the SEC in connection with the prior investigation and settlement.
According to the SEC’s complaint filed today, nine days before an August 8, 2018, acquisition announcement, Holzer, of Wellington, Florida, learned material nonpublic information about the prospective DNB acquisition from an investment adviser pursuant to a non-disclosure agreement that prohibited him from disclosing or trading on the information. The SEC alleges that Holzer used that information to purchase 23,000 shares of DNB stock in offshore accounts belonging to two Cayman Islands-based entities that Holzer directly or indirectly controlled, Maglione International Ltd. and Frontenac Investments Ltd., resulting in $391,308 in ill-gotten profits. Although those trades took place at roughly the same time as the options trades at issue in the prior lawsuit, according to the SEC’s complaint, Holzer did not disclose the offshore trading to the SEC.
“We allege that Mr. Holzer is a serial insider trader whose conduct merits the stiffest penalties available to the Commission,” said Gurbir S. Grewal, Director of the SEC’s of the Division of Enforcement. “In this case, a fine equal to three times his illicit trading profits sends a strong deterrent message not just to Mr. Holzer, but also to others who may contemplate engaging in such conduct.”
The SEC’s complaint, filed in the Southern District of New York, charges Holzer with violating the antifraud provisions of the federal securities laws and seeks permanent injunctive relief and civil penalties, as well as disgorgement of ill-gotten gains from Maglione and Frontenac, which are named as relief defendants. Holzer, without admitting or denying the SEC’s allegations, has agreed to settle the SEC’s charges by consenting to the entry of a final judgment permanently enjoining him from violating the charged provisions of the securities laws and ordering him to pay a civil penalty of $1,173,926. Maglione and Frontenac, without admitting or denying the SEC’s allegations, have consented to the entry of final judgments ordering that they pay disgorgement of $331,389 and $59,920, respectively, representing the amount of profits from Holzer’s DNB trading in their respective accounts, plus prejudgment interest of $84,032 (for Maglione) and $15,194 (for Frontenac). The proposed settlements are subject to court approval.
The SEC’s investigation was conducted by Derek Schoenmann and Elizabeth Baier of the New York Regional Office. The investigation was supervised by Celeste Chase and Thomas P. Smith, Jr. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.