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MCA President’s Son Pays $400,000 Insider Trading Penalty

December 11, 1992

LOS ANGELES (AP) _ The son of the president of MCA Inc. has agreed to pay more than $400,000 in penalties for tipping friends to confidential information he overheard during a visit to his father’s home.

The Securities and Exchange Commission said the agreement Thursday settled the insider-trading lawsuit against Jon Sheinberg and three associates whom he tipped in 1990 about Matsushita Electric Industrial Co.’s impending $6.6 billion purchase of MCA.

Sheinberg’s three friends agreed to pay significant penalties and surrender trading profits and interest. Neither Sheinberg, a talent agent and former production executive at 20th Century Fox, nor the others admitted or denied any guilt under the settlement.

″He’s pleased to resolve the issues and has cooperated fully with the commission,″ said Sheinberg’s attorney, Ted Levine.

An MCA spokeswoman said Sheinberg’s father, company President Sidney Sheinberg, had no comment on the settlement. The elder Sheinberg was not charged with any wrongdoing.

The SEC alleged the 34-year-old Sheinberg learned of the impending deal by overhearing his father on the telephone while visiting his parents’ home on Sept. 21, 1990.

After Sheinberg learned from his wife that his son had eavesdropped, he cautioned his son not to trade in MCA stock and keep news of the deal confidential, the SEC said.

Within three days, however, Sheinberg leaked the information to businessman Richard Ursitti (now his father-in-law), pizzeria owner Barry Fogel (a friend of Sheinberg’s ex-wife) and Richard Shephard (Sheinberg’s business manager), the government charged.

The SEC said all three on Sept. 24 made large purchases of MCA stock and MCA call options, a type of security that returns huge profits when a company’s stock rises. The stock and the options both surged the next day when The Wall Street Journal reported that Matsushita was engaged in buyout talks with MCA, an entertainment conglomerate owning Universal Pictures and MCA Records.

The SEC estimated Ursitti’s illicit profits at $260,827; Fogel’s at $103,793; and Shephard’s at $53,369. Jon Sheinberg was not charged with buying stock for himself.

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