Bloomberg News

Diamondback Capital’s Scolaro Settles SEC Insider-Trading Case

September 01, 2011

Sept. 1 (Bloomberg) -- Anthony Scolaro, an ex-portfolio manager for Diamondback Capital Management LLC, agreed to pay about $203,000 to settle an insider-trading lawsuit filed against him by the U.S. Securities and Exchange Commission.

Scolaro, 50, accused of reaping $1.1 million for his firm by trading on inside information about Axcan Pharma Inc. late in 2007, agreed to disgorge $140,400 in principal and interest and pay a $63,000 penalty, the SEC said in a statement.

The allegations were related to a criminal case in which Scolaro pleaded guilty to insider-trading charges stemming from the Galleon Group LLC investigation, the agency said yesterday in a complaint in U.S. District Court in New York.

Scolaro, a portfolio manager at the Stamford, Connecticut- based Diamondback, made the illicit profit acting on his firm’s behalf, according to the SEC complaint. He traded on inside information about Axcan that originated at the New York office of the Boston law firm Ropes & Gray LLP, the agency said.

Axcan announced its acquisition by TPG Capital for $23.35 per share, a 28 percent premium, on Nov. 29, 2007, by which time Diamondback held 319,876 of its shares, some of which it then sold for a profit, the SEC said.

Scolaro’s November 2010 plea of guilty to insider trading was unsealed in May. He hasn’t been sentenced. His attorney, William Brodsky, didn’t immediately reply to a telephone message seeking comment on yesterday’s filing.

Diamondback to Pay

Diamondback, also named as a defendant, agreed to disgorge $1.07 million in principal and interest, according to the SEC.

Diamondback disclosed the settlement to its investors in a letter yesterday, Steven Bruce, a spokesman, said by e-mail.

“The complaint contains no allegations of misconduct by Diamondback,” the firm said, adding that it and not its investors will pay for the settlement.

The case is SEC v. Diamondback Capital Management LLC, 11- cv-6112, in the U.S. District Court, Southern District of New York (Manhattan).

--With assistance from Bob Van Voris in New York. Editors: Charles Carter, Andrew Dunn

To contact the reporters on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net; Andrew Harris in Chicago at aharris16@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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