SEC Charges 14 in Wall Street Insider Trading Ring

Defendants Include Hedge Funds, Lawyers and Professionals at UBS, Bear

Stearns, and Morgan Stanley

FOR IMMEDIATE RELEASE

2007-28

Washington, D.C., March 1, 2007 - The U.S. Securities and Exchange Commission today
charged 14 defendants in a brazen insider trading scheme that netted more than $15
million in illegal insider trading profits on thousands of trades, using information stolen
from UBS Securities LLC and Morgan Stanley & Co., Inc. The SEC complaint alleges that
eight Wall Street professionals, including a UBS research executive and a Morgan
Stanley attorney, two broker-dealers and a day-trading firm participated in the scheme.
The defendants also include three hedge funds, which were the biggest beneficiaries of
the fraud.

"Our action today is one of several that will make very clear the SEC is targeting hedge
fund insider trading as a top priority," said SEC Chairman Christopher Cox.

The scheme involved unlawful trading ahead of upgrades and downgrades by UBS
research analysts and corporate acquisition announcements involving Morgan Stanley's
investment banking clients. The ringleaders of the UBS part of the scheme went to great
lengths to hide their illegal conduct, first through a clandestine meeting at Manhattan's
famed Oyster Bar and eventually the use of disposable cell phones, secret codes and
cash kickbacks before the scheme unraveled.

"Today's events should send a message to anyone who believes that illegal insider
trading is a quick and easy way to get rich. No matter how clever you are, no matter
how hard you try to avoid detection, you underestimate us at your peril," said SEC
Enforcement Director Linda Chatman Thomsen. "Illegal insider trading undermines the
level playing field that is the hallmark of our capital markets. It is, however, particularly
pernicious when Wall Street insiders — who derive their already substantial livelihood
from the capital markets and those markets' investors — shamelessly compromise the
markets' integrity and investors' trust for a quick buck."

SEC Associate Director of Enforcement Scott W. Friestad said, "Today's action is one of
the largest SEC insider trading cases against Wall Street professionals since the days of
Ivan Boesky and Dennis Levine. It involves fraud by employees of some of the biggest
brokerage and investment banking firms in the country. We will do everything possible
to make sure that, in addition to any other remedies or sanctions imposed, none of these
individuals ever works in the securities industry again."

According to the SEC complaint, Mitchel Guttenberg, an executive director in the equity
research department at UBS, provided material, nonpublic information concerning
upcoming UBS analyst upgrades and downgrades to traders Eric Franklin and David
Tavdy, in exchange for sharing in the illicit profits from their trading on that information.
Franklin and Tavdy illegally traded on this inside information personally, for the hedge
funds Franklin managed, and for the registered broker-dealers where Tavdy was a
trader. Franklin and Tavdy also had a network of downstream tippees who illegally
traded on this inside information, including a third hedge fund, a day-trading firm, and
three registered representatives at Bear, Stearns & Co., Inc.

Several of those who illegally traded on the UBS information, and others, also traded
ahead of corporate acquisition announcements using information stolen from Morgan
Stanley. According to the complaint, Randi Collotta, an attorney in the global compliance
department of Morgan Stanley, together with her husband, Christopher Collotta, an
attorney in private practice, provided material, nonpublic information concerning
upcoming corporate acquisitions involving Morgan Stanley's investment banking clients
to Marc Jurman, a registered representative at a Florida broker-dealer. Jurman then
traded on this information and shared his illicit profits with the Collottas. Jurman also
tipped Robert Babcock, a registered representative at Bear Stearns, who traded on the
information and tipped Franklin, a hedge fund managed by Franklin, and another
registered representative at Bear Stearns.

As a result of the conduct described in the complaint, the Commission alleges that each
named defendant violated the antifraud provisions of the federal securities laws. The
Commission's complaint seeks permanent injunctive relief, disgorgement of illicit profits
with prejudgment interest, and the imposition of civil monetary penalties.

The Commission's complaint names the defendants and includes the allegations set forth
below:

• Mitchel S. Guttenberg, age 41, who is a registered representative at UBS, and is

an executive director and institutional client manager in the firm's equity research
department. Guttenberg illegally tipped material, nonpublic information in
connection with the UBS part of the scheme, in exchange for sharing in the illicit
trading profits.

• Erik R. Franklin, age 39, who, at times during the relevant period, was a portfolio
manager for the Lyford Cay hedge fund and an employee of Bear Stearns in New
York, N.Y., an analyst for the Chelsey Capital hedge fund in New York, N.Y., and a
portfolio manager for the Q Capital hedge fund. Franklin illegally traded on and
tipped material, nonpublic information from UBS and Morgan Stanley.

• David S. Tavdy, age 38, who, at times during the relevant period, was a
proprietary trader and registered representative at Andover Brokerage LLC in
New York, N.Y.; a proprietary trader and registered representative at Assent, a
broker dealer in New York, N.Y., and a trader at Jasper Capital. Tavdy illegally
traded on and tipped material, nonpublic information in connection with the UBS
part of the scheme.

• Mark E. Lenowitz, age 43, who, at times during the relevant period, was a
portfolio manager for the Chelsey Capital hedge fund in New York, N.Y., and a
limited partner in the Q Capital hedge fund. Lenowitz illegally traded on material,
nonpublic information in connection with the UBS part of the scheme.

• Robert D. Babcock, age 33, who is a registered representative at Suntrust Capital

Markets, Inc. and, during the relevant time period, was a registered
representative at Bear Stearns in New York, N.Y., and was associated with the
Lyford Cay hedge fund. Babcock illegally traded on and/or tipped material,
nonpublic information from UBS and Morgan Stanley.

• Andrew A. Srebnik, age 35, who is a registered representative at Jefferies &

Company, Inc. and, during the relevant time period, was a registered
representative at Bear Stearns in New York, N.Y. Srebnik illegally traded on
material, nonpublic information in connection with the UBS part of the scheme.

• Ken Okada, age 31, who is a registered representative at Cathay Financial, Inc.
and, during the relevant time period, was a registered representative with Bear
Stearns in New York, N.Y. Okada illegally traded on and/or tipped material,
 nonpublic information from UBS and Morgan Stanley.

• David A. Glass, age 32, who is the owner and president of Jasper Capital and, at
times during the relevant period, also was a registered representative at Assent.
Glass traded on material, nonpublic information in connection with the UBS part
of the scheme.

• Randi E. Collotta, age 30, who is an attorney and the Director of Securities
Operations at The Garden City Group, Inc. and, during the relevant time period,
was an attorney in the global compliance department of Morgan Stanley in New
York, N.Y. Randi Collotta illegally tipped material, nonpublic information she stole
from Morgan Stanley, in exchange for sharing in the illicit trading profits.

• Christopher K. Collotta, age 34, who is an attorney in private practice.

Christopher Collotta illegally tipped material, nonpublic information that his wife,
Randi Collotta, stole from Morgan Stanley, in exchange for sharing in the illicit
trading profits.

• Marc R. Jurman, age 31, who, at times during the relevant period, was a
registered representative at the Boca Raton, Fla., branch office of Marlins Capital,
LLC, and a registered representative at the Boca Raton, Fla., branch office of
Finance 500, Inc. Jurman traded on and tipped material, nonpublic information
from Morgan Stanley.

• Q Capital Investment Partners, LP, which is a Delaware limited partnership with

offices in Fort Lee, N.J. During the relevant time period, Q Capital operated as a
hedge fund. Q Capital traded on material, nonpublic information from UBS and
Morgan Stanley.

• DSJ International Resources Ltd., which does business as Chelsey Capital, and is
a New York corporation with offices in New York, N.Y. During the relevant time
period, Chelsey Capital operated as a private hedge fund. Chelsey Capital traded
on material, nonpublic information in connection with the UBS part of the
scheme.

• Jasper Capital LLC, which is a New York limited liability company owned by Glass.
During the relevant time period, Jasper Capital operated as a day-trading firm
from the offices of Assent in New York, N.Y. Jasper Capital traded on material,
nonpublic information in connection with the UBS part of the scheme.

The Commission acknowledges the assistance of the United States Attorney's Office for
the Southern District of New York and the Federal Bureau of Investigation. The
Commission's investigation is ongoing.

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http://www.sec.gov/news/press/2007/2007-28.htm