Agrees to pay a penalty equal to three times his unlawful profits to settle charges
Introduction
The SEC filed a complaint against Charles Rustin Holzer, a former broker and family office executive. This comes after Holzer settled charges by the SEC last year related to his trading in options of Dun & Bradstreet Corp. (DNB) based on non-public information. The latest complaint filed by the SEC reveals additional unlawful activities by Holzer, involving undisclosed trades in DNB stock through offshore accounts.
The Allegations
According to the SEC complaint, Holzer acquired material nonpublic information about an upcoming acquisition of DNB on August 8, 2018. This information was obtained from an investment adviser under a non-disclosure agreement, which prohibited Holzer from trading or revealing the information. Nevertheless, Holzer allegedly proceeded to purchase 23,000 shares of DNB stock in offshore accounts belonging to two entities he controlled – Maglione International Ltd. and Frontenac Investments Ltd. These undisclosed offshore trades resulted in $391,308 in illicit profits for Holzer.
The SEC’s Legal Action
The complaint, which was filed in the Southern District of New York, cites Holzer’s violation of the antifraud provisions of federal securities laws. As part of its legal action, the SEC seeks permanent injunctive relief and civil penalties. Moreover, disgorgement of the ill-gotten gains from the offshore accounts is demanded from two relief defendants, Maglione and Frontenac.
Proposed Settlements
Holzer has agreed to settle the charges without admitting or denying the allegations. The proposed settlement involves the entry of a final judgment against him, permanently enjoining him from violating the charged provisions of the securities laws. Additionally, Holzer has consented to pay a civil penalty amounting to $1,173,926.
Similarly, Maglione and Frontenac, the entities with the undisclosed offshore accounts, have consented to the entry of final judgments against them. Both entities neither admit nor deny the allegations but have agreed to pay disgorgement amounts. Maglione will disgorge $331,389, while Frontenac will disgorge $59,920. These figures represent the profits from Holzer’s DNB trading in their respective accounts. Prejudgment interest of $84,032 for Maglione and $15,194 for Frontenac will also be included.
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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.
