Two years after the U.S. Securities and Exchange Commission accused a former metro Atlanta man of illegally reaping more than $500,000 by buying and selling stock on information unavailable to other investors, a federal judge has cleared him.
Ladislav “Larry” Schvacho, who previously lived in Lilburn and Stone Mountain and now resides in South Carolina, said the outcome vindicates him, but he accused the SEC of abusing its authority.
“My experience demonstrates serious flaws in the way the SEC approaches some of these highly-questionable cases,” Schvacho said in a statement, which he said would be his only comment. “They have the use of virtually unlimited taxpayer money, and if they lose there are no negative consequences.”
An SEC spokeswoman in Washington said the agency would have no comment on the case, and she would not say whether an appeal is planned.
The SEC accused Schvacho of buying stock in the Houston-based staffing firm Comsys IT Partners before it was acquired by the temporary employment agency Manpower in February 2010.
The agency said Schvacho gleaned nonpublic information while then-Comsys Chief Executive Officer Larry Enterline, who was a friend, called other Comsys executives to discuss the acquisition, and through confidential merger-related documents to which Schvacho had access.
U.S. District Court Judge William Duffy Jr., however, found the SEC’s evidence against Schvacho was circumstantial and the agency didn’t provide sufficient proof that he possessed nonpublic information before trading.
Schvacho’s attorney, Ross Albert of Morris, Manning & Martin, said the concerns the judge had with the agency’s case were the same concerns his client raised months before it was filed in 2012.
“It should never have gone to court,” Albert said. “The judge repeatedly noted the obvious gaps and contradictions in the SEC’s theory of the case, and specifically found that both the testimony of Mr. Schvacho and Larry Enterline, the alleged source of inside information, was credible.”
