SEC ANNOUNCES GUILTY PLEA TO CRIMINAL CHARGES IN INSIDER TRADING CASE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23150 / December 5, 2014

USA v. John Patrick O'Neill, Case No. 1:14-cr-10317-WGY in the United States District Court for the District of Massachusetts

USA v. Robert H. Bray, Case No. 1:14-MJ-5119-JGD in the United States District Court for the District of Massachusetts

Securities and Exchange Commission v. J. Patrick O'Neill and Robert H. Bray, Civil Action No. 1:14-cv-13381 (District of Massachusetts, Complaint filed August 18, 2014)

Boston-Area Defendant in SEC Insider Trading Case Pleads Guilty to Criminal Charges

The Securities and Exchange Commission announced today that on December 4, 2014, J. Patrick O'Neill ("O'Neill") pled guilty to a criminal charge of conspiracy to commit securities fraud.

The Commission previously charged O'Neill and Robert H. Bray ("Bray") with insider trading in a civil action filed on August 18, 2014. The criminal charge is based on the same conduct underlying the SEC's action. The SEC's complaint alleged that O'Neill, a former senior vice president at Eastern Bank Corporation, learned through his job responsibilities that his employer was planning to acquire Wainwright Bank & Trust Company ("Wainwright"). According to the SEC's complaint, O'Neill tipped Bray, a friend and fellow golfer with whom he socialized at a local country club. In the two weeks preceding a public announcement about the planned acquisition, Bray sold his shares in other stocks to accumulate funds he used to purchase 31,000 shares of Wainwright. After the public announcement of the acquisition caused Wainwright's stock price to increase nearly 100 percent, Bray sold all of his shares during the next few months for nearly $300,000 in illicit profits.

O'Neill was initially charged by a criminal complaint and arrested in August 2014. On October 31, 2014, the United States Attorney's Office for the District of Massachusetts filed a criminal Information against O'Neill charging him with conspiracy to commit securities fraud. Bray was arrested by the Federal Bureau of Investigation on November 12, 2014 and charged by a criminal complaint with participating in the insider trading conspiracy.

The SEC's action, which is pending, seeks injunctions against each of the defendants from further violations of the charged provisions of the federal securities laws, disgorgement of ill-gotten gains, and civil penalties.

SEC CHARGES MAN WITH INSIDER TRADING AHEAD OF ORACLE'S ACQUISITION OF ACME PACKET INC.

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission charged a Silicon Valley man with insider trading ahead of Oracle Corporation's acquisition of Acme Packet Inc. based on confidential details he learned from his wife, a finance manager at Oracle.

The SEC alleges that Tyrone Hawk of Los Gatos, Calif., violated a duty of trust by trading after he overheard work calls made by his wife, a finance manager at Oracle Corp., regarding her company's plan to acquire Acme Packet Inc. Hawk also had a conversation with his wife in which she informed him that there was a blackout window for trading Oracle securities because it was in the process of acquiring another company. According to the SEC's complaint, Hawk bought Acme Packet shares before the acquisition was announced in February 2013, and reaped approximately $150,000 by selling after the stock price rose 23 percent on the news. Without admitting or denying the allegations, Hawk agreed to pay more than $300,000 to settle the SEC's charges.

The SEC's complaint charges Hawk with violations of Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. Hawk has settled the SEC's charges without admitting or denying the allegations. He has agreed to the entry of a judgment enjoining him from future violations of the relevant provisions of the Exchange Act, and to pay disgorgement and prejudgment interest of $154,134.50, and an additional penalty equal to his profits of $151,480.00.

The SEC's investigation was conducted by Jennifer J. Lee under the supervision of Michael S. Dicke and Jina L. Choi of the San Francisco Regional Office. The SEC acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA) in this matter.

SEC CHARGES FRIEND AND RELATIVES IN INSIDER TRADING CASE

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION

SEC Charges Director's Brother, and His Friend and His Relative, with Insider Trading in Shares of a Medical Professional Liability Insurer

The Securities and Exchange Commission charged the brother of a director, his friend, and his sister-in-law with insider trading in the securities of an East Lansing, Mich.-based holding company for a medical professional liability insurer.

The SEC alleges that John A. Stilwell misappropriated confidential information from his brother, an American Physicians Capital, Inc., (ACAP) director, about the anticipated acquisition of ACAP by another insurance company. Stilwell in turn shared this nonpublic information with his friend, Dr. Michael C. Moore, and his sister-in-law, Jillian M. Murphy. Moore and Murphy each tipped another person who purchased ACAP shares. The four tippees purchased ACAP stock based on confidential information about the impending sale in the months leading up to a public announcement. Collectively, they made nearly $62,000 in illegal profits on their ACAP stock following the announcement.

Stilwell and his tippees agreed to pay a combined total of about $167,000 to settle the SEC's charges.

According to the SEC's complaint filed in the U.S. District Court for the Southern District of New York, Stilwell, a resident of New York, worked as an employee of his brother's investment firm while his brother was serving as a member of ACAP's board of directors. At a meeting on March 12, 2010, ACAP's board confidentially discussed whether it should consider a potential sale of ACAP, instructed company management to evaluate whether or not to continue as an independent, stand-alone company, and authorized ACAP's CEO and Stilwell's brother to determine potential strategic partners and contact them on a preliminary basis in order to determine their interest in acquiring ACAP.

The SEC alleges that, as Stilwell's brother and ACAP's CEO continued taking definite steps toward a sale, Stilwell misappropriated material nonpublic information from his brother and disclosed it to his friend, Moore, and sister-in-law, Murphy. Between April 16 and 30, 2010, Moore, Murphy, and two individuals that they tipped illegally purchased 8,200 shares of ACAP stock based on the confidential information Stilwell tipped. On July 8, the acquisition of ACAP by Napa, Calif.-based insurer The Doctors Company was publicly announced, and ACAP shares closed approximately 28 percent higher than the previous day's closing price.

Without admitting or denying the allegations in the SEC's complaint, Stilwell, Moore, and Murphy consented to the entry of final judgments ordering them to pay disgorgement, prejudgment interest, and financial penalties, and permanently enjoining them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Specifically, Stilwell agreed to pay approximately $41,500; Moore, a resident of Colorado, agreed to pay approximately $113,000; and Murphy, also a resident of Colorado, agreed to pay approximately $12,000. The proposed settlement is subject to court approval.