SEC charges 2 with trading on Howard Stern deal

WASHINGTON (Reuters) – U.S. regulators said on Monday they
charged two individuals with insider trading ahead of news in
2004 that radio shock jock Howard Stern was moving to Sirius
Satellite Radio.

The U.S. Securities and Exchange Commission said accountant
Gary Herwitz and former Sirius executive Tracey Stanyer
“illegally profited from advance knowledge of radio personality
Howard Stern’s $500 million contract with Sirius.”

Both executives settled with the commission without
admitting wrongdoing and agreed to pay fines and to disgorge
ill-gotten gains, the SEC said.

Stern rocked the broadcasting world in October 2004 when he
signed a five-year contract with Sirius giving him two entire
channels on the subscription-based satellite radio system. He
is expected to start broadcasting on Sirius in early January.

Herwitz, a certified public accountant and former president
of the accounting firm Mahoney Cohen & Co., agreed to pay
$52,000, while former Sirius executive vice president Stanyer
agreed to pay $35,000, said the investor protection agency.

The judgment against Stanyer also bars him from acting as
an officer or director of a public company, the SEC said.

The SEC alleged in court that Herwitz bought Sirius stock
on September 30, 2004, after learning in confidence from a
colleague at Mahoney Cohen that Stern had received an offer
from Sirius and that the parties were negotiating.

The SEC alleged that Stanyer bought Sirius stock on October
5, 2004, after learning in confidence from a senior Sirius
executive that Sirius had signed an agreement with Stern.

“The contract was announced the next day,” the SEC said.

“It is particularly troubling when accountants or corporate
executives, who are entrusted with confidential information,
believe they can illegally trade on such information with
impunity,” said SEC Northeast Regional Office Director Mark
Schonfeld in a statement.

An attorney for Stanyer declined to comment. An attorney
for Herwitz could not immediately be reached for comment.