Taher Suterwalla
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20718 / September 15, 2008
Securities and Exchange Commission v. Taher Suterwalla, No. 06-CV-1446 DMS (LSP) (S.D. Cal.)
Judgment Entered Against British Trader Charged With Insider Trading; Trader Agrees to Pay Almost $3.9 Million
On September 12, 2008, the Hon. Dana M. Sabraw of the United States District Court for the Southern District of California entered a final judgment against Taher Suterwalla, a resident of the United Kingdom, in the insider trading case pending against him. The case concerned allegations that Suterwalla profited illegally when, in the weeks leading up to the July 14, 2006 announcement that Petco Animal Supplies, Inc. ("Petco") had agreed to be purchased by two private equity firms, he purchased and sold Petco call options and spread bets on the price of Petco securities. Without admitting or denying the allegations of the Commission's complaint, Suterwalla agreed to disgorge $3,082,520 in profits gained as a result of the conduct alleged in the complaint, with prejudgment interest thereon in the amount of $327,367.90, and to pay a civil penalty in the amount of $484,100. In addition, Suterwalla consented to the entry of an order that permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
On July 18, 2006, pursuant to the Commission's emergency request, the Court entered a temporary restraining order freezing proceeds from sales by certain then-unknown purchasers of call options for Petco common stock. On August 1, 2007, the Commission filed an amended complaint charging Suterwalla with insider trading in the securities of Petco, and on November 2, 2007, the Commission filed a second amended complaint which contained additional details about the alleged fraudulent transactions and which added allegations that Suterwalla had destroyed relevant evidence. The second amended complaint alleged that in the three weeks preceding Petco's July 2006 announcement, Suterwalla purchased Petco call options from a Swiss financial institution, which filled Suterwalla's orders by purchasing Petco call options in the United States. The second amended complaint further alleged that Suterwalla purchased from brokerage houses in the United Kingdom certain derivative instruments known as spread bets, which caused the spread bet brokers to purchase Petco common stock and options in the United States.
The Commission acknowledges the Chicago Board Options Exchange, the United Kingdom Financial Services Authority, the Swiss Federal Banking Commission, and the Ontario Securities Commission for their assistance in this matter.
For more information, see Litigation Release No. 19778 (July 27, 2006).