SEC ALLEGES INSIDER TRADING BY A COMPANY BOARD MEMBER

The following excerpt is from the SEC website: On August 5, 2011, the Securities and Exchange Commission filed a civil injunctive action in the United States District Court for the Southern District of New York charging a former member of Mariner Energy Inc.’s board of directors, and his son, a securities industry professional, with illegally tipping and trading on the basis of inside information about the impending acquisition of Mariner Energy. The SEC’s complaint alleges that H. Clayton Peterson, who served on Mariner Energy, Inc.’s board of directors from 2006 through 2010, provided his son, Drew Clayton Peterson, with confidential information, learned during various board meetings, about Apache Corporation’s upcoming acquisition of Mariner Energy. According to the allegations, in the week leading up to the April 15, 2010 announcement, Clayton Peterson tipped his son on multiple telephone calls and at in-person meetings about the impending takeover. Drew Peterson, a managing director at a Denver-based investment adviser, then traded on the illegally obtained inside information and purchased Mariner Energy stock for himself, his relatives, his clients, and for a close friend. Drew Peterson also tipped other close friends as to the impending acquisition of Mariner Energy who also traded on the illegally obtained information. The insider trading by the Petersons and others generated more than $5.2 million in illicit profits. According to the SEC’s complaint, Clayton Peterson explicitly instructed his son, Drew Peterson, to purchase Mariner Energy stock for a family member based on positive news that the company was about to announce. As the announcement date neared, Clayton Peterson was even clearer in his discussions with his son, telling him that the company was going to be acquired and would no longer be a public company within a few days. Based on the inside information Drew Peterson learned from his father, Drew Peterson purchased Mariner Energy stock for his own accounts, as well as for his relatives, his clients, and for a close friend. In addition, Drew Peterson used the nonpublic information provided by his father to tip several close friends. One of those friends, a portfolio manager at a hedge fund, reaped approximately $5 million in illegal profits for himself, his hedge funds and his relatives. The SEC’s complaint charges Clayton Peterson and Drew Peterson with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a final judgment permanently enjoining the defendants from future violations of the above provisions of the federal securities laws, ordering them to disgorge their ill-gotten gains plus prejudgment interest on a joint and several basis, and ordering them to pay financial penalties. The SEC also seeks to permanently prohibit Clayton Peterson from acting as an officer or director of any registered public company.”