By Carrie Johnson
Washington Post Staff Writer
Thursday, June 14, 2007

A prominent Washington lawyer yesterday settled civil charges that he misappropriated secret information to buy Vastera stock in advance of a merger.

David A. Schwinger, 50, purchased 10,000 shares of the Dulles company shortly after learning about an impending 2005 merger between Vastera and J.P. Morgan Chase, according to court papers.

Schwinger, the former managing partner of the District office of Katten Muchin Rosenman, did not admit or deny wrongdoing in the settlement with the Securities and Exchange Commission. He agreed to return $13,000 in profit and to pay $26,000 more in penalties, said Robert B. Kaplan, the SEC's assistant enforcement director.

"What's particularly egregious about this case is that it involves misconduct by a lawyer seeking to personally profit from confidential client information," said Scott W. Friestad, associate SEC enforcement director.

Schwinger left the law firm in November 2006, according to the SEC complaint. He started his own corporate, real estate and tax law firm in Northwest Washington later that month, according to his Web site.

"It was a modest matter that deserved to be resolved swiftly," Schwinger's lawyer, John M. Fedders, said in an interview.

As part of his duties at Katten Muchin, which has 650 lawyers, Schwinger interviewed job candidates. In that capacity, he met with the chief counsel of Vastera, which helps businesses track international shipments, over the course of nine months in 2004, court papers said.

Vastera became a client of the law firm, and Schwinger signed a letter setting out the terms of the client relationship in August 2004, the SEC said. As part of a sales pitch about business opportunities he might generate for Katten Muchin if he were hired, the unidentified chief counsel told Schwinger that Vastera received a merger offer from J.P. Morgan Chase on Oct. 26, 2004.

Less than two weeks later, Schwinger bought Vastera stock at an average price of $1.70 per share. The share price rose by 50 percent, and trading volume peaked at nearly four times the daily average after the deal became public in January 2005, allowing Schwinger to profit by $13,027, according to the SEC complaint.