UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA. Case No. ~ _. PlaintiffSecurities and Exchange Commission (the "Commission") alleges:

Transcription

1 Case :-cv-00-ieg -NLS Document Filed 0/0/ Page of 0 0 DANIEL M. HAWKE HawkeD@sec.gov ELAINE C. GREENBERG GreenbergE@sec.gov MICHAEL J. RINALDI RinaldiM@sec.gov COLLEEN K. LYNCH LynchCK@sec.gov DAVID W. SNYDER SnyderD@sec.gov Attorneys for Plaintiff SECURITIES AND EXCHANGE COMMISSION Mellon Independence Center 0 Market Street, Suite 000 Philadelphia, Pennsylvania 0 Telephone: () -00 Facsimile: () -0 SECURITIES AND EXCHANGE COMMISSION, v. Plaintiff, DEAN A. GOETZ, Defendant. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA PlaintiffSecurities and Exchange Commission (the "Commission") alleges: SUMMARY OF THE ACTION 'CV0 IEG NLS Case No. ~ _ COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS. This case involves unlawful insider trading by Defendant Dean A. Goetz (the "Defendant"), an attorney who is a resident ofcarlsbad, California. In December 00, the Defendant's daughter ("Daughter") was visiting her parents for the holidays and stayed at Defend,ant's horne. At the time, Daughter was a corporate associate in the Los Angeles officeof a large, international law firm (the "Firm") who was working on an impending merger and acquisition involving Abbott Laboratories ("Abbott") and her Firm's client, Advanced Medical

2 Case :-cv-00-ieg -NLS Document Filed 0/0/ Page of 0 L. '''0 Optics, Inc. (which hereinafter is referred to by its former New York Stock Exchange ticker symbol, "EYE"). Because the timing ofher visit coincided with the anticipated closing ofthe Abbott-EYE transaction in January 00, Daughter performed deal-related work in various locations in Defendant's home while she was staying there and worked on deal-related documents that identified EYE by name.. In breach ofhis duty oftrust and confidence to Daughter, the Defendant misappropriated from her material, nonpublic information regarding the impending Abbott-EYE merger while she worked in her family home.. On January, 00, the day the deal was scheduled to be announced, shortly before the market was to close, Defendant bought 00 shares ofeye, the company Daughter's Firm was advising, through an online brokerage account he had not accessed in almost a year. Four days later, on January,00, EYE publicly announced that it had entered into an agreement with Abbott pursuant to which Abbott planned to acquire EYE at the cash price of$.00 per share through a tender offer. Ultimately, Defendant sold all 00 shares ofeye stock, making a profit of $,.. Through his conduct, Defendant violated Sections IO(b) and (e) ofthe Securities Exchange Act of ("Exchange Act") [ U.S.C. j(b) & n(e)] and Rules 0b- and e- thereunder [ C.F.R. 0.0b- & 0.e-]. JURISDICTION AND VENUE. This Court has jurisdiction over this action pursuant to Sections (e), A, and ofthe Exchange Act [ U.S.c. u(e), u-l, and aa]. Defendant, directly or indirectly, made use ofthe means or instrumentalities ofinterstate commerce, or the mails, or the facilities of a national securities exchange in connection with the transactions, acts, practices, and courses of business allegedin this Complaint.

3 Case :-cv-00-ieg -NLS Document Filed 0/0/ Page of 0 0 L.. '"'. The Commission brings this action pursuantto Section A ofthe Exchange Act [ U.S.C. u-l]. The Commission seeks a permanent injunction against the Defendant, enjoining him from engaging in the acts, practices, and courses ofbusiness alleged in this Complaint, disgorgement ofall profits realized, prejudgment interest, civil money penalties, and such other and further relief as the Court may deem just and appropriate.. Venue in this District is proper pursuant to Section ofthe Exchange Act [ U.S.C. aa]. Defendant is an inhabitant ofand transacts business in the Southern District of California, and certain ofthe acts, practices, and courses ofbusiness constituting the violations of the federal securities laws alleged herein occurred within the Southern District ofcalifornia. DEFENDANT. Defendant Dean A. Goetz, age, resides in Carlsbad, California. Defendant graduated from the University ofnorth Dakota in 0 and from the University ofnorth Dakota School oflaw in. Currently, Defendant is an attorney with a solo practice in Solana Beach, California, principally handing the litigation ofpersonal injury matters. Defendant is a member of the California bar. RELATED ENTITIES. The Firm is a large, international law firm with offices located in the United States and abroad, including Los Angeles, California. The Firm served as legal counsel for EYE in connection with Abbott's tender offer to acquire the outstanding shares ofeye. 0. Advanced Medical Optics, Inc. (or "EYE") was a manufacturer ofmedical products for the eye headquartered in Santa Ana, California. It now operates as Abbott Medical Optics, Inc., a subsidiary ofabbott. Before the January,00 public announcement that Abbott would acquire EYE through a tender offer, EYE traded on the New York Stock Exchange under the ticker symbol "EYE."

4 Case :-cv-00-ieg -NLS Document Filed 0/0/ Page of 0 0 FACTS A. EYE Sought Strategic Options, Including a Possible Acquisition by Abbott II. In October 00, EYE hired an investment banking firm (the "Investment Bank") to assist it in exploring several strategic options for the company, including capital raising transactions and possibly the sale ofthe company. During the week ofoctober, at the request ofeye, the Investment Bank contacted Abbott to gauge Abbott's interest in acquiring EYE or some other strategic transaction involving both companies.. In late October 00, EYE sought the Firm's assistance in connection with EYE's search for strategic options, including a possible acquisition by Abbott.. The Firm is a major international law firm and is one ofthe largest merger and acquisitions firms in the country. Daughter, then an associate in the Firm's Los Angeles office, began working on the transaction in early November 00. Among other things, Daughter assembled the "data room" at the Firm's offices so that Abbott and its legal and financial advisors could conduct due diligence ofeye. Daughter also assisted in the drafting ofthe merger agreement, drafted various disclosure schedules, and performed other administrative tasks related to the transaction. B. During a Visit by His Daughter, Defendant Misappropriated Material, Nonpublic Information Regarding the Impending Abbott-EYE Merger. From about December or,00, to about January,00, Daughter stayed at her parents' home in Carlsbad, California. Because the Abbott-EYE merger was expected to close in January 00, Daughter worked at her parents' house during her visit and, indeed, could not participate in family activities.. While she was at her parents' home, Daughter prepared the disclosure schedules related to the Abbott-EYE transaction, which identified, among other things, EYE's license agreements, material contracts to which EYE was a party, employment and indemnification

5 Case :-cv-00-ieg -NLS Document Filed 0/0/ Page of agreements between EYE and certain ofits employees, EYE's products, EYE's subsidiaries, and the lawsuits in which EYE was engaged. Significantly, unlike other deal-related documents circulated among the members ofthe Abbott-EYE deal team, the draft schedules that Daughter worked on at her parents' home did not substitute a code name for EYE to preserve confidentiality and identified the company by name. In addition, the schedules identified the names ofcertain individuals with whom the company had employment or indemnification agreements.. Daughter worked in several areas ofher parents' home, including a desk in a 0 common area ofthe home, her bedroom, and Defendant's home office. When she worked on the deal-related documents, Daughter would "park" herselfin common work spaces, including Defendant's home office, and spread out her work.. On or about December,00, Daughter learned that the Abbott-EYE transaction 0 was going to close earlier than expected and that Abbott's acquisition ofeye would be announced on January, 00, after the close ofthe market. As a result, Daughter cut short her visit to her parents' home and returned to work in Los Angeles on January,00. When she left, she told her parents that she had to return to work because she was working on a transaction and that "[h]opefully we'll close soon." C. Defendant Misappropriated Material, Nonpublic Information from His Daughter About the Abbott-EYE Transaction and Traded EYE Stock on the Basis ofthat Information. Defendant misappropriated material, nonpublic information regarding the impending Abbott-EYE merger from Daughter while she was staying at his home and working on the transaction.. On January, 00, at or about : p.m. Pacific time - shortly before the close of the market on the day the merger was supposed to be announced - Defendant logged on to his online brokerage account. This was the first time Defendant had logged on to his brokerage

6 Case :-cv-00-ieg -NLS Document Filed 0/0/ Page of account in almost a year. At or about : p.m. Pacific time, Defendant purchased 00 shares of EYE stock at an average price of$. per share. At : p.m. Pacific time, Defendant purchased an additional 00 shares ofeye stock at an average price of$. per share. 0. At the time Defendant purchased the 00 shares ofeye stock, substantial steps had been taken to commence a tender offer, including, but not limited to, the drafting ofa merger agreement.. When Defendant misappropriated information about the pending Abbott-EYE 0 transaction from Daughter and then traded on the basis ofthis information, he breached his duty of loyalty and confidentiality to Daughter.. At or about :0 a.m. Pacific time on January,00, EYE announced that it had entered into an agreement with Abbott pursuant to which Abbott planned to acquire EYE at the cash price of$.00 per share through a tender offer. Following this announcement, EYE's stock price closed at $.0 on January,00, an increase of$. per share, or approximately % over the prior trading day's closing price of$. per share.. On February,00, Defendant sold his 00 shares ofeye stock at $. per 0 share and, accordingly, made a profit of$,. of$ii,. D. Defendant Breached His Fiduciary Duty to His Daughter When He Traded on the Basis of the Material, Nonpublic Information to Which His Daughter Had Access. Based on the close nature oftheir relationship, Defendant owed to Daughter a duty oftrust and confidence.. At all times, Defendant knew or should have known that Daughter, due to her employment and position at the Firm, had access to material, nonpublic information about prospective mergers or acquisitions involving Firm clients.

7 Case :-cv-00-ieg -NLS Document Filed 0/0/ Page of 0 0. Defendant similarly knew or should have known that ifhe obtained access to confidential information to which Daughter had access in connection with her employment, that he should not use that information to his personal benefit.. Defendant breached this duty oftrust and confidence when he improperly obtained from Daughter material, nonpublic information about the impending Abbott-EYE transaction and traded on the basis ofthis information. -. Similarly, because Defendant knew or should have known that the material, nonpublic information about the impending tender offer came from Daughter (who worked for the legal advisor for EYE) Defendant knew or had reason to know that the information to which he had access, either directly or indirectly, about the pending Abbott-EYE merger was material and nonpublic and that he was prohibited from causing the purchase or sale ofthe security to be sought by the tender offer. FIRST CLAIM FOR RELIEF Violation of Section IOCb) of the Exchange Act and Rule IOb- Thereunder. The Commission re-alleges and incorporates by reference each and every allegation in paragraphs through, inclusive, as ifthey were fully set forth herein. 0. At the time ofdefendant's trades, the misappropriated information was nonpublic, held by the Firm as confidential information related to a client representation.. The misappropriated information was material - it would be important to a reasonable investor in making his or her investment decision, and indeed was important to Defendant, when misappropriating the information. There is a substantial likelihood that the disclosure ofthe misappropriated information would have been viewed by a reasonable investor as having significantly altered the total mix ofinformation available to investors.. At all times relevant to this Complaint, Defendant acted knowingly and/or recklessly.

8 Case :-cv-00-ieg -NLS Document Filed 0/0/ Page of. By engaging in the conduct described above, Defendant, directly or indirectly, in connection with the purchase or sale ofsecurities, by the use ofmeans or instrumentalities of interstate commerce, or the mails, or the facilities ofa national securities exchange, with scienter: a. b. employed devices, schemes, or artifices to defraud; made untrue statements ofmaterial facts or omitted to state material facts necessary in order to make the statements made, in the light ofthe 0 c. circumstances under which they were made, not misleading; and/or engaged in acts, pragtices, or courses ofbusiness which operated or would operate as a fraud or deceit upon any person in connection with the purchase or sale ofany security.. By engaging in the foregoing conduct, Defendant violated, and unless enjoined will continue to violate, Section lo(b) ofthe Exchange Act [ U.S.c. j(b)] and Rule 0b- IOb- thereunder [ C.F.R. 0.IOb-]. 0.0b-]. SECOND CLAIM FOR RELIEF Violation ofsection (e) of the Exchange Act and Rule e- Thereunder. The Commission re-alleges and incorporates by reference each and every allegation in paragraphs I through, inclusive, as ifthey were fully set forth herein. 0.. The Firm was the legal advisor to EYE in connection with Abbott's tender offer for the securities ofeye.. By January,00, the date on which Defendant placed his illegal trades, one or more substantial steps had been taken to commence the tender offer for EYE securities.. Because Defendant knew or should have known that the material, nonpublic information about the Abbott tender offer came from Daughter, who worked for the legal advisor to EYE, Defendant knew or had reason to know that the information that he received, directly or

9 Case :-cv-00-ieg -NLS Document Filed 0/0/ Page of 0 0 indirectly, about the pending merger was material andnonpublic and that he was prohibited from causing the purchase or sale ofthe security to be sought by the tender offer.. By engaging in the foregoing conduct, Defendant violated, and unless enjoined will continue to violate, Section (e) ofthe Exchange Act [ U.S.C. n(e)] and Rule e- thereunder [ C.F.R. 0.e-]. Judgment: PRAYER FOR RELIEF WHEREFORE, the Commission respectfully requests that the Court enter a Final I. Permanently restraining and enjoining Defendant from, directly or indirectly, engaging in conduct in violation of Section 0(b) loeb) ofthe Exchange Act [ U.S.C. j(b)] and Rule lob- thereunder [ C.F.R. 0.0b-] and from engaging in conduct in violation ofsection (e) of the Exchange Act [ U.S.C. u.s.c. n(e)] and Rule e- thereunder [ C.F.R. 0.e-]; II. Ordering Defendant to disgorge the unlawful trading profits derived from the activities set forth in this Complaint, together with prejudgment interest thereon; III. Ordering Defendant to pay a civil penalty pursuant to Section A ofthe Exchange Act [ U.S.C. u-l]; and

10 Case :-cv-00-ieg -NLS Document Filed 0/0/ Page 0 of 0 0 IV. Granting such other and further relief as the Court may deem just, equitable, and necessary. Respectfully submitted, By: /s/ Michael J. Rinaldi Daniel M. Hawke Elaine C. Greenberg Michael J. Rinaldi Colleen K. Lynch David W. Snyder Attorneys for Plaintiff SECURITIES AND EXCHANGE COMMISSION Mellon Independence Center 0 Market Street, Suite 000 Philadelphia, Pennsylvania 0 Telephone: () -00 Facsimile: () -0 RinaldiM@sec.gov Dated: June, 0 0

11 Case :-cv-00-ieg -NLS Document Filed 0/0/ Page of 'liljs '-IS (Rev. /0) CIVIL COVER SHEET TheJS civil cover sheetand the infonnation contained herein neither replace norsupplementthe the filing and service ofpleadings orotherother papers as required by law, exceptas provided by local rules ofcourt. This fonn, form, approved by thejudicial Conferenceoftheofthe United States in September, is required for the use ofthe ClerkofCourtfor for thepurposeofmitiating ofmitiating the civil docket sheet. (SEE INSTRUCfIONS INSTRUCTIONS ON THE TIlE REVERSE OF THE FORM.) I. (a) PLAINTIFFS Securities and Exchange Commission DEFENDANTS Goetz, Dean A. 'CV0 IEG NLS (b) County ofresidence offirst Listed Plaintiff (EXCEPT IN U.S. PLAINTIFF CASES) County ofresidence offirst Listed Defendant San Diego County, Cal. (IN U.S. PLAINTIFF CASES ONLY) NOTE: IN LAND CONDEMNATION CASES, USETIlE THE LOCATION OFTIlE THE LAND INVOLVED. INVOLYED. IXI (c) Attorney's (Firm (FinnName, Address, and Telephone Number) Attorneys (IfKnown) (lfknown) Michael J. Rinaldi, U.S. Securities and Exchange Commission, 0 Market St. Ste.000 Phila. Pa II. BASIS OF JURISDICTION (Place an "X" in One Box Only) U.S. Government o Federal Question Plaintiff (U.S. Government Not a Party) John D. Kirby, 00 Second Ave., Ste. 0, San Diego. Cal., a III. CITIZENSHIP OF PRINCIPAL P ARTIES(place an "X" in One Box for Plaintiff (For Diversity Cases Only) and One Box for Defendant) PTF DEF PTF DEF Citizen ofthis ofjis State o I 0 I Incorporated or Principal Place 0 0 ofbusiness InThis Jis State o U.S. Government Defendant o Diversity (Indicate Citizenship ofparties in Item II) III) Citizen ofanother State o 0 Incorporated and Principal Place ofbusiness In Another State Citizen or Subject ofa Forei Coon Coun IV. NATURE OF SUIT (place!placean..x" "X" in One Box OnIv) OnM., ~ Rl, ~~biil!lll!!;li!;bl' ibj'. '" i" " o0 0 Foreign Nation o a0 0 Insurance PERSONAL INJURY PERSONAL INJURY I0 0 Agriculture Appeal USC 0 00 State Reapportionment 0 Marine 0 0 Airplane 0a Personal Injury - 0 Other Food & Drug ao Withdrawal 0 0 Antitrust o 0 Miller Act 0 Airplane Product Med Malpractice oa Drug Related Seizure USC 0 0 Banks and Banking o 0 Negotiable Instrument Liability 0 Personal Injury - ofproperty USC 0 0 Commerce o 0 Recovery ofoverpayment ofoverpayruent 0 0 Assault, Libel & Product Liability 0 Liquor Laws. 0 0 Deportation & EnforcementofJudgment Slander 0 Asbestos Personal 0 Q RR R.R. & Truck 0 Copyrights 0 0 Racketeerlnfluenced Influenced and Medicare Act 0 0 Federal Employers' Injury Product 0 Airline Regs. 0 Patent Corrupt Organizations o Recovery ofdefaulted Liability Liability o 0 Occupational o 0 Trademark a0 0 Consumer Credit Student Loans 0 0 Marine PERSONAL PROPERTY PROPERlY Safety/Health SafetylHealth 0 0 Cable/Sat TV (Exc!. Veterans) 0 Marine Product 0 0 Other Fraud 00 Other a ~- a - ~ ~-."'~.r\--., :OW'",,",", III 0 0 Selective Service o Recovery ofoverpayment Liability 0 Truth in Lending,~~~ ",".f" "" o~ll!i 0 Secwities/Commodities/ SecwitieslCommoditiesl ofveteran's Benefits 0 0 Motor Vehicle 0a 0 Other Personal o 0 Fair Labor Standards IDA (ft) (f) Exchange 0 Stockholders' Suits 0 Motor Vehicle Property Damage Act Black Long Lung () a0 CustomerChallenge Cballenge 0 Other Contract Product Liability 0a Property Damage 0 LaborlMgml Relations DIWClDIWW DWClDIWW (0(g» USC 0 Contract Product Liability 0 0 Other Personal Product Liability o 0 LaborlMgmlReporting LaborlMgmt.Rcporting ssm Title XVI 0 0 Other Statutory Actions o Franchise IniUIY Iniurv & Disclosure Act o RSI (0('.» a0 Agricultural Acts "rnlr"g.!rlfq -,,-- ~ " -',-.'S"~mIDiiIbNSJl:: Sl!}~:mmm:l')lNSJIjl 0 0 Railway Labor Act -. -" ~., ~O 0 Economic Stabilization Act o 0 Land Condemnation 0 Voting 0 0 Motions to Vacate o 0 Other Labor Litigation o 0 Taxes (U.S. Plaintiff 0 Environmental Mailers Matters o 0 Foreclosure 0 Employment Sentence 0 Empl. Emp!. Ret. Inc. or Defendant) 0 Energy Allocation Act o 0 Rent Lease & Ejectment 0 Housing! Habeas Corpus: Secwity Act o IRS-Third Party 0 Freedom ofinfomtation ofinforntation 0 Torts to Land Accommodations 0 0 General USC 0 Act o Tort Product Liability 0 Welfare 0 Death Penalty 0 00Appeal offee Determination o 0 All Othcr OtherReal Property 0 Amer. wldisabilities w/disabilities Mandamus & Other o Naturalization Application Under Equal Access Employment a 0 Civil Rights Habeas Corpus - to Justice Employment 0 0 Civil Rights o Habeas Corpus - to Justice 0 Amer. wldisabilities w/disabilities - p0 Prison Condition Alien Detainee 0 0 Constitutionality of Other o Other Immigration State Statutes 0 0 Other Civil Rights Actions " V. ORIGIN ~ Original Proceeding (place an 'X' ''){'' in One Box Only) o Removed from 0 Remanded from 0 Reinstated or 0 Transferr~ Transferred from 0 Multidistrict State Court Appellate Court Reopened another dlstnct Litigation s Cl C~tt.%~C~i ~SffiJtbj& e rlwtej ou are filing (Do not cite jurisdictional statutes unless diversity): Appeal to District o Judge from Magistrate Jud ent VI. CAUSE OF ACTION I-B-n- ef-d-e-sc""'ri-pu..,. o...::n;.;:o;.,.fca---=u:..:.se-::...---:...: ~B~r':"'"ie~fd-:"e-sc-n':"'"'p-:ti-on:::'o:::'f~ca-u";;'s";"e:-'----'-"':"" VII. REQUESTED IN COMPLAINT: C~tua.%~C~i ~SffiJtbj&eITrlWteJ ou are filing (Do Dot cite jurisdictional statutes unless diversity): insider trading o CHECK IF THIS IS A CLASS ACTION UNDER F.R.C.P. UNDER F.RC.P. DEMANDS CHECK YES onlyifdemanded in complaint: JURY JURy DEMAND: 0 Yes ~No ~ VIII. RELATED CASE(S) IF ANY (See (Secinstructions): runge JUDGE DOCKET NUMBER DATE SIGNATURE OF ATTORNEY OF RECORD 0/0/0 lsi Michael J. Rinaldi FOR OFFICE USE ONLY RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE APPLYING IFP JUDGE MAG. JUDGE