Merger Acquisition Newsroom

Illinois Case On Information From The Director About The Pending Merger

Plaintiff Securities and Exchange Commission alleges as follows:

1. This case involves insider trading by the Defendants in the securities of Blue Rhino Corporation before a February 2004 public merger announcement. Matthew Roszak, the chief financial officer of a private company owned by a Blue Rhino director and a trusted confidant of the director, abused his position of trust and confidence and misappropriated material, non-public information from the director about the pending merger.
2. Roszak used the information to buy Blue Rhino stock for himself, as well as to tip Defendants Douglas Jozwiak and Darrin Edgecombe and two relatives to the non-public Blue Rhino merger negotiations.
3. Jozwiak and Edgecombe both bought Blue Rhino stock in advance of the acquisition. In addition, Edgecombe tipped Defendants Trifon Beladakis and Mark Michel, the latter a registered representative with Wachovia Securities, LLC. Beladakis and Michel both bought Blue Rhino stock.
4. In total, the Defendants purchased $742,987 of Blue Rhino stock, with many of the purchases occurring just days before the public merger announcement. In addition, after he was tipped and during the week prior to the public merger announcement, Michel purchased more than $1.2 million of Blue Rhino stock on behalf of his relatives and customers at Wachovia. The Defendants profited from these trades by selling the shares of Blue Rhino stock they bought prior to the merger announcement at higher prices after the merger was announced.
5. By engaging in the conduct described above, and described more fully below, each of the Defendants violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5.

Conclusion:
Permanently restrain and enjoin the Defendants and their agents, servants, employees, representatives, attorneys-in-fact, and assigns and those persons in active concert or participation with them, and each of them, from violating Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5.

Order each Defendant who purchased and sold Blue Rhino securities on the basis of material, non-public information to disgorge his trading profits from each illegal trade, including prejudgment interest thereon.

Order each Defendant to disgorge all profits, including prejudgment interest thereon, realized by (i) the persons to whom that Defendant unlawfully communicated material, non-public information, and (ii) the person who traded while in possession of material, non-public information learned as a result of that Defendant’s unlawful communication of material, non-public information.

Order each of the Defendants to pay civil penalties pursuant to Section 21A of the Exchange Act, 15 U.S.C. § 78u-1.