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Former Nixon Peabody Associate Faces Criminal Charges for Alleged Insider Trading
The National Law Journal
October 19, 2009
Federal prosecutors in Washington have accused former Nixon Peabody associate Melissa Mahler, who was hit with civil insider trading charges by the Securities and Exchange Commission last month, of making false statements to SEC investigators.
As The National Law Journal previously reported here, on July 28, 2004, 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. Less than an hour later, Mahler was allegedly on the phone with her Florida-based broker, instructing 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. Rooms.com later terminated the letter of intent.
Mahler resigned from Nixon Peabody in January 2005. She is now a solo practitioner in New York.
The federal charges against Mahler, filed in the U.S. District Court for the District of Columbia Thursday, offer a few more details about the SEC’s investigation. In November 2004, the charges say, the SEC was investigating Mahler for possible insider trading in connection with her purchase and sale of Teleplus stock. The charges do not say how the SEC was alerted to the allegedly illegal activity.
On Nov. 29, 2004, two SEC lawyers interviewed Mahler over the telephone and asked her about the Teleplus trade. In that interview, Mahler allegedly denied that she placed the order and said she only found out about the trade when she received her account statement from her broker. She also said her husband had the authority to make purchases on her account.
The charges say that Mahler knew about the trade, having allegedly made it herself. The charges also say that her husband does not have the authority to make trades on her brokerage account.
The U.S. Attorney's Office alleges one count of making false statements. Making false statements to a federal investigator is a felony that carries a maximum five-year prison sentence.
Assistant U.S. Attorneys Michael Atkinson and Vasu Muthyala and Special Assistant U.S. Attorney for the Fraud and Public Corruption Section Keshia West filed the charges.
Mahler is being represented by Patton Boggs partners Jamie Gardner and Robert Luskin. Gardner said in an interview, "She's looking forward to resolving the matter and moving on with her life."
Mahler, who is licensed to practice in New York, does not currently have any disciplinary actions filed against her, according to records filed with the New York State court system. She could not be reached for comment.
This article first appeared on The BLT: The Blog of Legal Times.
