February 05, 2016
A Doylestown lawyer convicted of insider trading on Friday could spend up to 25 years in prison for capitalizing on a 2011 merger involving an insurance company his firm was representing at the time, the U.S. Attorney's Office announced.
Herbert Sudfeld, 64, was a partner in a Pennsylvania law firm representing Harleysville Group, Inc. during its merger with Nationwide Mutual Insurance Company. Court testimony revealed that Sudfeld was aware of the imminent merger and acted against his fiduciary duty to keep the information confidential.
On September 28, 2011, one day before the merger was publicly announced, Sudfeld contacted his stock broker to purchase Harleysville stock. After the announcement, Harleysville stock rose by nearly 85 percent over the previous day's trading. Sudfeld sold his shares that day to net personal profits of approximately $75,530.
During the course of an FBI investigation, Sudfeld told agents he had no knowledge of the Harleysville stock transactions until several days to a week later. He claimed to have told his broker that his position at the law firm prevented him from getting involved in the Harleysville stock and that he didn't discuss Harleysville trades until they were completed.
As a result of his conviction for insider trading and making a false statement, Sudfeld also potentially faces three years of supervised release and a fine.
The case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Denise S. Wolf.