On January 30, 2023, the Securities and Exchange Commission reached a settlement with Randy Herschaft, a New Jersey resident, to resolve allegations that he committed insider trading for trading in securities of Asta Funding, Inc., a New Jersey-based financial services company, based on material nonpublic information (“MPNI”) obtained from a close friend who was a senior executive at Asta. According to the SEC’s order, Herschaft and an unnamed Asta executive were close friends who routinely shared confidences with one another. During a telephone call on the evening of March 22, 2020, the friend allegedly shared MPNI regarding Asta’s planned acquisition with Herschaft in confidence, just weeks before the information was announced publicly by Asta on April 8, 2020. Unbeknownst to the friend, Herschaft allegedly misappropriated the information and purchased Asta securities before the announcement in breach of a duty of trust and confidence that he owed to his friend. The SEC further alleges that, following the announcement, Herschaft obtained realized and unrealized profits of just over $35,000 as a result of these trades, in violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
Without admitting or denying the findings in the SEC’s order, Herschaft consented to the entry of the order and agreed to cease and desist from committing further violations of Section 10(b) and Rule 10b-5. Herschaft also agreed to pay disgorgement of more than $35,000, prejudgment interest of almost $3,500, and a civil penalty of approximately $35,000.