Doylestown Lawyer Accused of Insider Trading

Herbert Sudfeld was charged by the FBI with insider trading and making false statements.

A Doylestown lawyer is in big trouble with the feds, charged with insider trading and making false statements under oath.

Herbert Sudfeld, a 64-year-old man from Doylestown, Pennsylvania, was indicted Thursday, according to the U.S. Attorney’s Office. He faces two counts of securities fraud, three counts of making a false statement, and one count of “aiding and abetting.”

Sudfeld, whose law firm was overseeing a merger transaction between Harleysville Group, Inc. — an insurance agency that, before the merger, was traded publicly on the NASDAQ stock index — and Nationwide Mutual Insurance Company. Sudfeld, who learned of the merger before it was publicly announced, had a “fiduciary duty,” the indictment says, “to keep it confidential.” The charges allege that on September 28th, 2011, Sudfeld through his broker purchased shares of Harleysville stock — one day before the merger deal went public.

Harleysville stock soared approximately 85 percent during that first day’s trading session after the merger was announced. Sudfeld allegedly sold his shares and gained a personal net profit of around $75,530. He also allegedly intentionally misinformed FBI agents that he was not aware of his stock transactions until “several days to a week later,” the feds say.

If he is convicted, Sudfeld faces a maximum sentence of 25 years in prison, three years of supervised release, and a $5.25 million penalty.

See the full indictment.