After a three-hour deliberation, a federal jury in Boston found Steven Nothern
, a former senior vice president and manager of seven bond funds at MFS, liable for insider trading.
The case concerns information regarding a decision the Treasury made in October 2001 to suspend 30-year bond issuances.
The SEC alleged that Nothern on October 31, 2001 heard from Peter J. Davis, a Washington-D.C.-based consultant, that the Treasury decided to cease issuance of the long bond. Davis picked up the information by attending a press conference. That piece of information, however, was supposed to be embargoed until 10:00 a.m.
According to the SEC, Nothern found out from Davis that morning, before the news became public, and that Nothern and other MFS portfolio managers purchased $65 million in par value of 30-year bonds, generating about $3.1 million in illegal profits.
The SEC's complaint seeks a permanent injunction, disgorgement with pre-judgment interest and a civil money penalty. The court will determine the appropriate remedies against Nothern at a later date.
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