Former Florida Bar tax section chair Donald Tescher faces a one-year suspension of his Florida Bar license following his 2011 purchase of $10,000 in stock immediately after a client told him the company was likely to be sold and balloon in value.
Tescher of Boca Raton was among five Florida residents the Securities and Exchange Commission charged in 2015 with insider trading in advance of Gilead Sciences Inc.’s purchase of Pharmasset Inc.
Tescher was a name partner at Tescher & Spallina in 2011 when a longtime client, Dr. Elliot Hahn, met with him and two others to discuss end-of-year tax matters, according to the Florida Bar complaint.
Hahn told his lawyers—Tescher and partner Robert Spallina—as well as his accountant, that he was on the board of publicly traded pharmaceutical company Pharmasset, Inc., which was in negotiations to be acquired by Gilead. If the deal went through, Hahn said his stock in the company would realize a large profit. After Hahn left, Tescher bought $10,000 of stock in Pharmasset, according to the Florida Bar complaint.
Spallina and the accountant, Steven Rosen, also immediately bought Pharmasset securities. In addition, Spallina told a financial adviser at a brokerage firm and his next-door neighbor, and both of them bought the securities, too, according to a 2015 SEC press release.
After California-based Gilead Sciences announced the purchase Nov. 21, 2011, the price of Pharmasset stock rose by 84 percent and the five men sold their stock, reaping more than $234,000 in profit, according to the SEC. Spallina, Tescher, Rosen and the financial adviser, Thomas Palermo, and neighbor Brian Markowitz, collectively agreed to pay approximately $489,000 to settle the charges, according to the SEC. The Florida Bar revoked Spallina’s law license in September 2016, according to his Florida Bar online profile.
Tescher agreed to return $9,937—the amount he realized from the transaction—plus prejudgment interest of $690, and pay a $9,937 penalty, according to the SEC. According to the Florida Bar referee’s report, he paid it.
In August, Florida Bar referee Judge Peter M. Evans recommended Tescher be suspended for one year, rather than be disbarred, citing Tescher’s remorse, lack of prior record, cooperation with criminal and bar investigators, evidence of good character and his payment of more than $20,000 to the SEC as part of his consent judgment.
“The court has carefully reviewed the Standards for Imposing Lawyer Sanctions and recognizes that, absent mitigation, disbarment is the preferred sanction when an attorney commits what would be considered a serious crime for purely selfish motives,” wrote Judge Peter M. Evans, the court referee in the case. “However, the respondent’s long record of service and contributions to the community and legal profession have been given great weight and the court recommends suspension only.”
Over a dozen supporters—mostly lawyers and law firm managing partners, including Holland & Knight’s Steven Sonberg—had submitted letters recommending leniency for Tescher.
The referee’s report states that Sonberg wrote that he had known Tescher professionally and personally for 35 years and had never known him “to engage in questionable conduct.”
“I know that Don recognizes the seriousness of his actions, and is genuinely remorseful over his actions,” Sonberg wrote in an affidavit. “While Don’s actions in the insider trading matter were serious violations of the securities laws and the rules regarding the Florida Bar, I do not believe they outweigh the many contributions he has made over his career to his clients, the legal profession, the community, and his family.”
According to his Florida Bar online profile, Tescher became eligible to practice law in Florida in 1969. He is a past chair of the Florida Bar Association’s tax section and has been on the executive council of the tax and real property sections.
According to the Florida Bar, Tescher was chairman of the Florida Bar tax section from 1995 to 2002; on the Real Property Executive Council from 1995 to Nov. 30, 2016; and on the tax section executive council from 1997 to 2007, including some time as chairman of that executive council. Committee members and section leaders serve at the pleasure of the Florida Bar president.
Tescher and his attorney did not immediately respond to requests for comment.