Reinstatement Granted
The Pennsylvania Supreme Court has reinstated a former Cozen O’Connor attorney who had been suspended for one year for insider trading.
on certification by the Disciplinary Board that William E. Gericke, who was suspended on consent for a period of one year, has filed a verified statement showing compliance with the Order of Suspension and Pa.R.D.E. 217, and there being no other outstanding order of suspension or disbarment, William E. Gericke shall be reinstated to active status.
A cease and desist order of the Securities & Exchange Commission set out the facts
At all times relevant to these proceedings, Gericke was an attorney at a large international law firm, practicing primarily in the insurance subrogation area. Gericke was also the firm’s conflicts counsel, which required him to identify possible conflicts of interest between existing firm clients and potential new engagements.
On or before October 7, 2019, a partner at the law firm asked Gericke, in his capacity as conflicts counsel, to run a “confidential” conflicts check in which the partner informed Gericke of a potential merger involving the firm’s client, LPT, and Prologis. This information was material and nonpublic.
Gericke understood that the information about the potential merger was confidential. Gericke knew, or was reckless in not knowing, that he had a duty to maintain the confidentiality of the information and was not permitted to trade on it.
Nevertheless, the next day, and in advance of any public announcement of the merger, Gericke purchased 1,000 shares of LPT stock in his personal brokerage account. Gericke did not inform his law firm of his plans to purchase the stock.
On Sunday, October 27, 2019, Prologis publicly announced the definitive merger agreement with LPT. The following day, LPT’s stock price closed at $57.50, an increase of 13.7% over the closing price the trading day immediately before the announcement. After Gericke learned of the announcement, Gericke sold his entire position in LPT on November 19, 2019, for a profit of $10,002.20.
By purchasing LPT stock while in possession of confidential information regarding the impending merger, Gericke misappropriated material nonpublic information that he obtained in the course of his employment as an attorney, and breached a duty of trust and confidence he owed to his law firm and LPT.
(Mike Frisch)