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Former Nixon Peabody Lawyer Hit With Insider Trading Charges
The National Law Journal
September 22, 2009
A former Nixon Peabody lawyer was charged with insider trading in D.C. federal court in a lawsuit filed last week.
The Thursday complaint, filed by the Securities and Exchange Commission in the U.S. District Court for the District of Columbia, alleges that Melissa Mahler, now a solo practitioner in New York, used information about a pending merger given to her by a client in 2004 to make an illegal profit when the deal was finalized.
On July 28, 2004, the complaint alleges, Mahler, then a lawyer for Nixon Peabody in Rochester, N.Y., was asked by client Roger Tichenor, the chief executive officer of Teleplus Consumer Services Inc., to draft a letter of intent involving a potential merger with Rooms.com, an online travel company. That conversation occurred at 9:15 a.m. Fifteen minutes later, the complaint says, Mahler called her broker and instructed him to buy 10,000 shares of Teleplus for $1,200. Teleplus was trading at 12 cents a share.
When the deal between Teleplus and Rooms.com was announced on July 30, 2004, Mahler allegedly called her broker and instructed him to sell the 10,000 shares of Teleplus for a profit of $5,800.
The complaint says Mahler resigned from Nixon Peabody in January 2005.
"Mahler breached her duties of loyalty and confidentiality by using material, nonpublic information for personal gain," the complaint says. The SEC, which is being represented by Paul Kisslinger, Cheryl Scarboro and Reid Muoio, is seeking a permanent injunction barring Mahler from further violating the insider trading rules, the repayment of her "ill-gotten gains" plus interest, and a civil penalty of an unspecified amount.
Mahler did not immediately return calls for comment.
Nixon Peabody spokeswoman Allison McClain said in a statement, "Ms. Mahler was briefly employed by the firm and left nearly five years ago, immediately after we learned that her personal conduct had come under regulatory scrutiny. We have cooperated with the government's investigation and intend to continue doing so. Nixon Peabody requires that all personnel adhere to the highest ethical standards and has rigorous procedures to enforce this policy. Conduct that violates our standards is not tolerated."
This article first appeared on The BLT: The Blog of Legal Times.
