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The friend of the top executive at Comsys IT Partners is suspected of using insider information to profit from the sale of Comsys to ManpowerGroup Inc. (NYSE: MAN) in 2010, the U.S. Securities and Exchange Commission announced Wednesday. Ladislav “Larry” Schvacho made approximately $511,000 in illicit profits using insider information, the agency reported.
Schvacho purchased approximately 72,000 shares of Comsys in the weeks leading up to the Feb. 2, 2010 announcement that it would be acquired, according to the SEC. The stock price increased 31 percent following the announcement.
“As a result of Schvacho’s time with the CEO, he learned nonpublic details and stockpiled Comsys shares until it became by far the largest stock investment that he’d ever made into a single company,” said William Hicks, associate regional director of the SEC’s Atlanta regional office. “The Comsys CEO confided in Schvacho, who exploited that trust and stole information for a half-million-dollar payday.”
Schvacho and Comsys CEO Larry Enterline were friends since they met while working at the same company in the 1970s, according to the SEC. They maintained a friendship even after Enterline moved to Houston, and they met for dinner and drinks when Enterline visited Atlanta, where Schvacho lived.
Schvacho may have overheard Enterline discuss the Comsys deal during a dinner at a restaurant on Nov. 6, 2009, when Enterline — in Schvacho’s presence — discussed it in a phone conversation with Comsys executives, according to the SEC.
Enterline also discussed the possible acquisition during another phone conversation with a Comsys executive — again in Schvacho’s presence — during a Florida vacation with Schvacho between Dec. 11 and Dec. 14, 2009, the SEC reported
Enterline reasonably expected Schvacho to not disclose or otherwise use the confidential information, according to the SEC.