News and Press Releases

Former President of Accounting Firm Pleads Guilty to Insider Trading in Advance of the Howard Stern - Sirius Satellite Radio Deal

FOR IMMEDIATE RELEASE
December 19, 2005

GARY HERWITZ, a certified public accountant and the former president of the accounting firm of Mahoney Cohen & Company, CPA, P.C. Mahoney Cohen, pleaded guilty today to insider trading in connection with his purchase of 25,000 shares of Sirius Satellite Radio, Inc.Sirius stock while in possession of material non-public information regarding negotiations between radio personality Howard Stern and Sirius to move the Howard Stern Show from traditional radio broadcast to Sirius. The proceedings were held before United States District Judge Nicholas G. Garaufis at the U.S. Courthouse in Brooklyn, New York.

The guilty plea was announced by ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York, and MARK J. MERSHON, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office. The investigation resulting in HERWITZ guilty plea was conducted with the assistance of the United States Securities and Exchange Commission (SEC). Earlier today, the SEC filed civil charges against HERWITZ related to the criminal case. According to the felony information filed today, on September 20, 2004, Sirius made a written offer to Stern soliciting him to join the company programing line-up. Following receipt of the offer, Stern turned for financial and tax advice to the CEO of Mahoney Cohen, who had served as Stern longtime personal accountant. On September 21, 2004, the CEO informed HERWITZ of the offer and instructed HERWITZ that the information was confidential. Two days later, the CEO informed HERWITZ that the negotiations were continuing. While in possession of this information, on September 30, 2004, HERWITZ purchased 25,000 shares of Sirius common stock at a price of $3.19 per share. 1

On October 1, 2004, an agreement was executed under which Stern agreed to move his radio program to Sirius, effective January 1, 2006. On October 6, 2004, both Stern and Sirius announced the agreement and move, and that same day the price of Sirius common stock rose from $3.35 to $4.29 per share.

In pleading guilty today, HERWITZ admitted that he learned of the negotiations between Stern and Sirius from a colleague at Mahoney Cohen and that he wrongfully purchased Sirius stock while in possession of material non-public information. He further acknowledged that in making the stock purchase, he breached the fiduciary duty he owed to his firm and its clients.

Accountants play a trusted role as gate-keepers of our nations securities markets, stated United States Attorney MAUSKOPF. When a professional abuses his position of trust in an effort to make a quick profit, he will be held accountable. We are committed to ensuring a level playing field in the securities markets and bringing to justice those who seek to game the markets for personal gain. Ms. MAUSKOPF thanked the FBI and the SEC for their assistance in the investigation.

FBI Assistant Director-in-Charge MERSHON stated, "The strength of the American stock markets is rooted in the average investor confidence in the fairness and integrity of the system. When those who are privileged with confidential information use that edge to reap profits or avoid losses, while the typical investor is the outsider without the advantage, the level playing field disappears. In vigorously enforcing our laws against insider trading, we are keeping the game fair and balanced."

When sentenced by Judge Garaufis, HERWITZ faces a maximum sentence of 20 years imprisonment, and a $5,000,000 fine.

The government case is being prosecuted by Assistant United States Attorney Sean Casey.

 

The Defendant:

Name: GARY HERWITZ
DOB:August 25, 1955

 

 

_____________________________

1The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

 


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