Question
Facts: At real estate broker party at the Isleworth Country Club, Donna Yun mentioned to Jerry Burch, a fellow real estate broker at her firm,
Facts: At real estate broker party at the Isleworth Country Club, Donna Yun mentioned to Jerry Burch, a fellow real estate broker at her firm, that there would be an impending drop in the price of stock in her husband's company. In reliance on this tip, Burch purchased a series of options and sold them for a profit of $269,000. Within 12 hours, the SEC began investigating the transaction and charges were filed against Burch and Yun under the 1988 insider trading act. Yun contents that since she received no benefit, she should not be held liable for Burch's actions.
Decision: Judgement for the SEC. While Donna Yun received no tangible monetary benefit in this case, she at least received the intangible benefit of providing a ''gift'' to Burch. Moreover, the judge could not conclude that some tangible benefit for Yun was not planned. Additionally, if tippers were free from sanction to use inside information to benefit business associates, the insider trading rule would be nullified. The SEC noted that it settled dozen of insider trading cases with standard offer of full disgorgement, interest plus a one- time penalty equal to the disgorgement, and that for this settlement package to continue to work it is important for courts to impose more substantial penalties. The court decided that this argument was entitled to no weight, since it prejudices individuals from seeking trails on the merits. It assessed a $100,000 penalty against both defendants, in addition to disgorgement and interest. [SEC v Donna Yun, 148 F Supp 2d 1287 (MD Fla 2001)]
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