$2.1-Million Penalty Set in Insider Deal

A Houston man agreed today to forfeit $1 million in profits and pay a record $2.1-million penalty to settle federal insider trading charges stemming from last year’s bid by General Electric Co. to acquire RCA Corp.

Harvey Katz was tipped in advance about the deal by his son, an investment banker at Lazard Freres & Co., the Securities and Exchange Commission said in a civil complaint in federal district court here. Lazard Freres advised RCA’s board on the merger, which was completed earlier this year.

The elder Katz, in turn, tipped his father-in-law, Elie Mordo, and his stockbroker, Fred Aizen of The Milwaukee Co., both of whom also hastened to buy RCA stock and options before the price shot up when the GE deal was announced last Dec. 11, the SEC said.

All Four Consent

All four men entered consent agreements to settle the SEC charges as soon as they were filed. Without either admitting or denying liability:

--Harvey Katz, 54, agreed to forfeit $1,035,425 in illegal profits and interest and pay $2,111,168 in penalties under the Insider Trading Sanctions Act.

--Marcel Katz, 23, of New York agreed to pay a civil penalty of $173,891.

--Mordo agreed to forfeit $1,087,532 in illegal profits.

--Aizen agreed to forfeit $60,000 in illicit profits and pay a $20,000 penalty.

In addition, the SEC banned the son, Marcel Katz, from working in the securities industry and barred Aizen from working in the business for at least three years, after which he can reapply. Marcel Katz had been working at Lazard under a two-year program, similar to an internship, after which he was expected to study for a master’s degree in business administration.