July 16 (Reuters) - A Pennsylvania lawyer was indicted on Thursday on charges that he engaged in insider trading after learning that a client at his law firm was about to announce a merger.
Herbert Sudfeld, 64, was charged with five counts including securities fraud and making a false statement in an indictment filed in federal court in Philadelphia.
Prosecutors said Sudfeld engaged in the insider trading while he was a partner at a law firm that represented insurer Harleysville Group Inc in its $760 million merger with Nationwide Mutual Insurance Co in 2011.
Robert Welsh, Sudfeld’s lawyer, said his client would plead not guilty at his arraignment on Monday.
Neither the indictment nor a related lawsuit by the U.S. Securities and Exchange Commission filed on Thursday named the law firm. But Fox Rothschild, which advised Harleysville, confirmed it was the law firm in question.
Mark Silow, Fox Rothschild’s managing partner, said the firm was “saddened” to hear about the charges against Sudfeld, who ceased working at the firm in 2012. Silow added that the firm had always taken steps to safeguard clients’ confidences.
According to the indictment, Sudfeld, a real estate lawyer, learned his partners were representing Harleysville two days before the merger was announced and bought stock in the company ahead of the news.
When the merger with Nationwide was announced, Harleysville’s stock rose about 85 percent. Sudfeld then sold the shares he had bought just a day earlier, reaping $75,530 in profits, prosecutors said.
The indictment said that Sudfeld later made false statements to Federal Bureau of Investigation agents investigating insider trading. (Reporting by Nate Raymond in New York; Editing by Alan Crosby)
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