Defense attorney at NY insider trading trial faults SEC witness
NEW YORK (Reuters) - A lawyer for a New York fund manager sued for insider trading urged jurors on Thursday to disregard the recollections of a key witness for the U.S. Securities and Exchange Commission, saying his memory of a phone call with his client 13 years ago was faulty.
The lawyer, Joel Cohen, said to jurors during closing arguments in the SEC's civil case against Nelson Obus that to find the Wynnefield Capital Inc fund manager engaged in a $1.3 million insider trading scheme, they would not only have to rely on those unreliable memories but also find that his client lied on the stand.
"It makes no sense for him to risk his entire life, his entire career, what he built, by doing what the SEC said he did," Cohen told jurors in Manhattan federal court.
But Kyle DeYoung, a lawyer for the SEC, said to jurors that evidence showed that Obus had illegally traded on a tip his analyst, Peter Black, received from a friend, Peter Strickland, about the 2001 takeover of industrial products supplier SunSource Inc.
Obus knew he should not trade on the information, which co-defendants Strickland and Black, an employee in one of Obus's investment management firms, should not have passed on, DeYoung said.
"But he bought the stock anyway," DeYoung said. "That is insider trading."
The lawsuit, first filed in 2006, centers on the $72 million buyout of SunSource by private equity firm Allied Capital. GE Capital, where Strickland worked, was a lender to SunSource during the deal.
The SEC says Strickland called Black, a college friend, on May 24, 2001, and told him about the deal.
After the call, Black told Obus, who then called SunSource Chief Executive Maurice Andrien, the SEC says. Obus then directed Wynnefield to buy a block of SunSource stock days before the deal was announced, according to the SEC.
On Thursday, DeYoung showed jurors excerpts of Andrien's testimony, in which he said Obus told him a "little birdie in Connecticut" told him SunSource would be sold to a "financial buyer." Andrien has given the same account since 2002, de Young said.
"He's got no dog in this fight, no bone to pick with Mr. Obus," he said.
But Cohen said it was "an undeniable fact" that "Mr. Andrien has trouble remembering things."
Cohen, who also questioned the recollections of a second SEC witness who spoke to Obus, said Andrien was traveling frequently in 2001 and working nights and weekends, "hardly a recipe for remembering things well."
The ex-CEO even forgot he may have been in Washington, D.C., when he talked to Obus, Cohen said.
Mark Cohen, Black's lawyer, argued that Strickland did not tell his client about the deal and instead asked about SunSource's management after noticing his friend's hedge fund was an investor.
"That was it," he said. "No mention of Allied. No mention of mergers and acquisitions."
The case is Securities and Exchange Commission v. Obus et al, U.S. District Court, Southern District of New York, No. 03150.
(Reporting by Nate Raymond in New York)
- French warplanes search Mali desert for crashed Air Algerie plane |
- At least 15 killed by shelling of Gaza school; toll exceeds 760 |
- Exclusive: Ukraine rebel commander acknowledges fighters had BUK missile
- U.S. House panel votes to authorize lawsuit against Obama
- Lawyers call for outside probe of 'bungled' Arizona execution |