Lawyer to Pay Up to $150,000 in Insider Case
Michael N. David, the key figure in the so-called Yuppie Five insider trading case, has agreed to pay as much as $150,000 through an unusual 11-year payback plan to settle civil charges filed here Wednesday by the Securities and Exchange Commission.
David, a former associate at the prominent New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison, will pay back the $50,000 in profits that the SEC says he made by passing secret information about pending corporate takeovers from his law firm to the four other defendants in the case.
In addition, he will pay penalties of as much as $100,000. The exact amount has not yet been set because the U.S. District Court here has yet to approve the unusual repayment plan proposed by the SEC. The plan ties the penalties to David’s income over the next 11 years, but where the SEC expects him to get that income could not immediately be learned. He was dismissed from the Paul, Weiss law firm last March.
Criminal Charges
A federal court judge is expected to approve the SEC settlement today. As is customary with such settlements, David neither admits nor denies any wrongdoing.
David, 28, is the first of the five young defendants in cases to face civil charges. All five have pleaded guilty to criminal charges. The case is not related to the much larger insider trading case involving former investment banker Dennis B. Levine.
David, the last of the five to plead, is scheduled to be sentenced March 4 after pleading guilty two weeks ago to one criminal count each of conspiracy, securities fraud, mail fraud and obstruction of justice in connection with this case.
The four young men who were David’s confessed conspirators in the scheme to make illegal profits by trading corporate stocks on the basis of confidential information are Andrew Solomon, a former Marcus Schloss & Co. analyst; Morton Shapiro, formerly of the Moseley, Hallgarten, Estabrook & Weeden brokerage; Robert Salsbury, a former analyst at the investment firm of Drexel Burnham Lambert, and Daniel Silverman, a friend and customer of Shapiro.
The SEC reiterated earlier charges by federal prosecutors that David learned of impending corporate takeovers being handled by his employer and illegally passed along the information to the other defendants before the deals were made public.
