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E&Y's Former Manager Settles Insider Trading Charges with the SEC

Monday, November 21, 2011
Yoomi Lee | Bloomberg Law SEC Litigation Release No. LR-22161 (Nov. 18, 2011); SEC v. Konyndyk, No. 11-CV-02055 (D.D.C. filed Nov. 18, 2011) The Securities and Exchange Commission (SEC) announced that Mark A. Konyndyk, CPA, a manager in the Transaction Advisory Services Group at Ernst & Young LLP (E&Y), settled charges for insider trading in advance of a tender offer. According to the SEC, Konyndyk performed due diligence work for E&Y's client Vivendi S.A. (Vivendi), who was involved in confidential merger discussions to acquire Activision, Inc (Activision). Konyndyk allegedly worked 36 hours on this merger transaction, which was assigned a confidential code name "Project Sego." Despite signing a confidentiality agreement and confirming his understanding and acceptance of E&Y's insider trading policy, Konyndyk purportedly bought Activision securities on multiple occasions while in possession of material non-public information. Specifically, both before and shortly after his departure from E&Y, Konyndyk allegedly purchased seven call options and 26 out-of-money call options in Activision. Konyndyk sold these options contracts and realized gross profits of $9,725 one day after Activision and Vivendi announced their business combination involving a post-closing tender offer. The SEC claimed that Konyndyk violated Section 14(e) of the Securities Exchange Act of 1934 and Rule 14e-3 thereunder. Without admitting or denying the allegations, Konyndyk agreed to be permanently enjoined from committing future violations of the federal securities laws and to pay $9,725 in disgorgement, $1,789.28 in prejudgment interest, and $9,725 in civil penalties. DisclaimerThis document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy.©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.

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