/f3d/362/1292-01

basis: proved; count: EZ Communications information; subject: count=EZ Communications information

Alan Box, EZ’s CEO, and Ginsburg discussed a specific share price, and Ginsburg knew both that Evergreen was interested in acquiring EZ and that EZ was talking to other companies.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

As for the nonpublic nature of the evidence, the jury heard testimony from Ron Peale, EZ’s CFO, that the talks were confidential.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

The materiality of an uncertain prospective event “depend[s] at any given time upon a balancing of both the indicated probability that the event will occur and the anticipated magnitude of the event in light of the totality of the company activity.”

Evidence kind: rule; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

The insider information in this case meets the materiality standard.

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

basis: proved; count: Katz Media information; subject: count=Katz Media information

As to Katz, Ginsburg was clearly privy to information gleaned under a confidentiality agreement.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

The jury had before it sufficient evidence to conclude that Ginsburg’s June 16 meeting with Olds indicated to Ginsburg that a deal had to happen fast.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

The jury could reasonably infer that the information was material and nonpublic.

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

basis: proved; party: Scott Ginsburg; theory: communication and knowing use of inside information; subject: party=Scott Ginsburg; theory=communication and knowing use of inside information

Ginsburg was chairman and CEO of Evergreen Media Corporation, which owned and operated a number of radio stations. In 1996 Evergreen became interested in acquiring EZ, a corporation that owned radio stations. Ginsburg met with EZ’s CEO Alan Box on Friday, July 12, 1996, and Box told him EZ was considering several “strategic alternatives.” Before the meeting no decision had been made to sell the company. On Sunday evening, July 14, Ginsburg called Mark at 10:02 p.m., and they spoke for 26 minutes. The next day, Monday, July 15, Mark bought 3800 shares of EZ stock. Mark spoke with Jordan in person and on the telephone over the next few days, and they admit they discussed the purchase of EZ stock.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

On July 24, EZ’s investment banker faxed a letter to Ginsburg stating that EZ bids were due by July 26. At 7:40 a.m. July 25, a call was placed from Ginsburg’s cell phone to his parents’ home. Later that day Mark purchased 3200 shares of EZ stock for Mark and his wife’s joint account. On July 26, Mark purchased 4300 shares of EZ stock for the same joint account and 7500 shares for a trust account for his son. Also on July 26, Ginsburg, on Evergreen’s behalf, submitted a written offer to acquire EZ for cash and stock. On Sunday, July 28, a ten minute call was placed from Ginsburg’s home to Mark’s home. On Monday, July 29, Jordan bought 5000 shares of EZ stock, and an hour later Mark bought 30,000 shares.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

That same evening, June 16, a call was placed from a cell phone registered to Ginsburg to a phone registered to Mark. The next day, June 17, Mark bought 150,-000 shares of Katz. On July 14, Evergreen/Chancellor announced it would acquire Katz through a tender offer for Katz stock at $11 a share. On July 16 or 17, 1997, Mark sold 132,500 shares of Katz and tendered the rest, resulting in a total profit of $729,000.

Evidence kind: fact; polarity: supports; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

Ginsburg offered evidence of public information about the companies as motivation for Mark’s trading, argued that the trades were consistent with prior trading history, and put forward innocent explanations for the calls.

Evidence kind: fact; polarity: cuts-against; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

The SEC must prove violations of § 10(b) and § 14(e), and their supplementary Rules, by a preponderance of the evidence, and may use direct or circumstantial evidence to do so.

Evidence kind: rule; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)

The call/trade pattern occurrences coupled with the jury’s right to disbelieve the innocent explanations of the calls and trades are enough to support the verdict.

Evidence kind: held; polarity: not recorded; absent flag: 0; quoted-rule flag: 0 (1 = tagged; 0 = not tagged)