SEC Charges Florida Investment Adviser a Second Time for Insider Trading

The Securities and Exchange Commission (SEC) has taken legal action by filing insider trading charges against Charles Rustin Holzer, who is a former broker and currently an executive at a family office. This move follows a previous settlement by the SEC in which Holzer faced charges related to trading options of Dun & Bradstreet Corp. (DNB) based on insider information. The latest complaint from the SEC asserts that in addition to the options trades that led to the earlier lawsuit, Holzer also engaged in illicit trading of DNB stock through undisclosed offshore accounts that were not reported to the SEC during the prior investigation and resolution.

According to the newly filed complaint, on a date nine days prior to an announcement about an acquisition on August 8, 2018, Holzer, located in Wellington, Florida, gained access to significant nonpublic information about the potential DNB acquisition from an investment adviser. This information was acquired under the terms of a non-disclosure agreement that explicitly prohibited him from revealing or trading based on this confidential information. The SEC alleges that Holzer exploited this privileged information to buy 23,000 shares of DNB stock through offshore accounts linked to two entities he directly or indirectly controlled, namely Maglione International Ltd. and Frontenac Investments Ltd. These entities were based in the Cayman Islands. As a result of these unauthorized trades, Holzer amassed ill-gotten profits totaling $391,308. Despite these trades occurring around the same time as the options transactions that were the focus of the earlier lawsuit, the complaint contends that Holzer did not disclose these offshore trades to the SEC.

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, remarked, “Our allegations suggest that Mr. Holzer has repeatedly engaged in insider trading activities that warrant the most severe penalties available from the Commission. In this case, imposing a fine equivalent to three times his unlawful trading profits sends a potent message of deterrence not just to Mr. Holzer, but to all others who might contemplate similar actions.”

The SEC’s complaint, which has been submitted in the Southern District of New York, charges Holzer with violating the antifraud provisions of federal securities laws. The SEC seeks a range of remedies, including permanent injunctive relief, civil penalties, and the return of ill-gotten gains from Maglione and Frontenac, which are identified as relief defendants. Without admitting or denying the SEC’s allegations, Holzer has chosen to settle the charges by consenting to a final judgment that permanently prohibits him from violating the implicated provisions of securities laws. He is also obligated to pay a civil penalty amounting to $1,173,926. Similarly, Maglione and Frontenac, without admitting or denying the allegations, have agreed to final judgments that require them to return disgorgement sums of $331,389 and $59,920, respectively. These sums represent the profits gained from Holzer’s DNB trading in their respective accounts, along with prejudgment interest. These settlements are contingent on court approval.