| NEW YORK
NEW YORK May 29 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
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
"But he bought the stock anyway," DeYoung said. "That is
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
"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.
(Reporting by Nate Raymond in New York)