SEC Charges Mark Begelman with Insider Trading

SEC v. Mark D. Begelman, Case No. 9:13-cv-80396 (S.D. Fl.).  On April 22, 2013, the SEC announced it filed a settled insider trading case against Mark Begelman for trading based on confidential information obtained through his membership in the World Presidents’ Organization (“WPO”), a global group of business leaders and executives with a written policy to keep information learned from other WPO members confidential.  The SEC alleges that Begelman joined the WPO when he was president and chief operating officer at Office Depot.  Begelman was part of a close-knit group of WPO members called Forum 91.  Begelman gleaned nonpublic information about a merger from a Forum 91 member who was an executive at both Bluegreen Corporation and BFC Financial Corporation.  The SEC alleges that Begelman learned that Bluegreen and BFC were in merger negotiations.  He e-mailed his stockbroker instructing him to buy shares of Bluegreen.  Begelman also spoke with his stockbroker by phone, and then the stockbroker purchased Bluegreen stock.  According to the SEC, Begelman breached the duty of trust and confidence owed to the WPO member from whom he learned the information.  After BFC issued a press release announcing the deal, Bluegreen’s share price rose significantly and Begelman sold all of his Bluegreen shares.  Without admitting or denying the allegations of the complaint, Begelman agreed to entry of a final judgment enjoining him from future violations of Section 10(b) of the Exchange Act and Rule 10b-5, ordering disgorgement of $14,949.34 plus prejudgment interest of $377.22, and imposing a civil monetary penalty of $14,949.34.  Begelman also agreed to be barred from serving as an officer and director of a public company for a period of at least five years.

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