Former Fox Rothschild Attorney Suspended For Insider Trading Conviction

An attorney recently convicted of insider trading has been suspended pending final discipline by the Pennsylvania Supreme Court.

The Reporter reported on the conviction

Doylestown lawyer Herbert K. Sudfeld, Jr. has been found guilty of illegally profiting from a 2011 merger between insurer Harleysville Group, Inc. and Nationwide Mutual Insurance Co., the U.S. Department of Justice announced.

Sudfeld, 64, was convicted on charges of insider trading and making a false statement in federal court on Feb. 5, according to the U.S. Attorney’s Office for the Eastern District of Pennsylvania.

Sudfeld, who was indicted in July on securities fraud and other criminal counts, faces a maximum sentence of 25 years in prison and three years of supervised release, and possibly a substantial fine.

Prosecutors had said that while a partner at Fox Rothschild, the law firm advising Harleysville Group in the merger, Sudfeld — despite his learning through nonpublic information that the merger was imminent and that he had “a fiduciary duty to keep it confidential,” prosecutors alleged — used the insider information to direct his stockbroker to purchase 1,000 shares of Harleysville stock under his wife’s account and 2,000 shares from his personal account on Sept. 28, 2011, the day before the public announcement of the merger, according to the federal indictment.

After the merger was announced on the morning of Sept. 29, 2011, just before the market opened, shares of Harleysville stock rose by about 85 percent, and Sudfeld immediately sold the 3,000 shares he had bought the day before, netting a profit of about $75,530, according to the indictment.

Prosecutors also said that during an investigation into the matter, Sudfeld lied to FBI agents looking into the alleged insider trading, falsely stating that he wasn’t aware of the stock transactions until several days to a week afterward; that he told his broker he couldn’t be involved in trades of Harleysville stock due to his position at the law firm; and that he didn’t discuss the stock trades with his broker until after they were completed.

It was not immediately known when Sudfeld will be sentenced.

The Securities & Exchange Commission filed a related civil suit . 

The temporary suspension was imposed based on the joint petition of the attorney and disciplinary counsel. (Mike Frisch)