SEC CHARGES FORMER BANK ANALYST AND OTHERS WITH INSIDER TRADING IN FRONT OF CLIENTS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

SEC Charges Former Investment Bank Analyst and Two Others With Insider Trading in Advance of Client Deals

08/25/2015 01:45 PM EDT

The Securities and Exchange Commission today charged a former investment bank analyst with illegally tipping his close friend with confidential information about clients involved in impending mergers and acquisitions of technology companies.  The SEC also charged his friend and another individual with trading on the inside information.

The SEC alleges that Ashish Aggarwal, who worked in J.P. Morgan’s San Francisco office, gleaned sensitive nonpublic information about two acquisition deals from colleagues who were working on them.  Aggarwal tipped Shahriyar Bolandian, who traded on the basis of the illegal tips in his own accounts as well as accounts belonging to his father and sister.  Bolandian also tipped his friend Kevan Sadigh so he could trade on the confidential information.  Bolandian worked at Sadigh’s e-commerce company, and together they made more than $672,000 in combined profits from their insider trading.

The SEC Enforcement Division’s Market Abuse Unit detected the insider trading through trading data analysis tools in its Analysis and Detection Center.

“We allege that Aggarwal, Bolandian, and Sadigh misused an investment bank’s confidential information for their personal benefit and victimized the bank, its clients, and investors,” said Robert A. Cohen, Acting Co-Chief of the SEC Enforcement Division’s Market Abuse Unit.  “We will continue to proactively identify and combat serial insider trading schemes, particularly when it involves industry professionals.”

In a parallel action, the U.S. Department of Justice today announced criminal charges against Aggarwal, who lives in San Francisco, as well as Bolandian and Sadigh, who each live in Los Angeles.

According to the SEC’s complaint filed in U.S. District Court for the Central District of California:

Aggarwal misappropriated confidential information about two J.P. Morgan-advised deals: Integrated Device Technology’s planned acquisition of PLX Technology in 2012 and salesforce.com’s acquisition of ExactTarget in 2013.
Aggarwal repeatedly communicated with Bolandian, his friend since college, in the days and weeks leading up to public announcements about the deals.

Bolandian and Sadigh bought the same series of call options in PLX Technology and ExactTarget.  Their trades were often within hours or even minutes of each other, and typically were 100 percent of the daily trading volume of those option series.
One of the brokerage accounts used by Bolandian was located offshore in the Bahamas.  He opened and funded the account with his credit card a week before the ExactTarget deal was announced.

Bolandian conducted various trades in his accounts on Aggarwal’s behalf in an arrangement that enabled Aggarwal to circumvent J.P. Morgan’s pre-clearance rules and potentially share in any profits.

The SEC’s complaint charges Aggarwal, Bolandian, and Sadigh with violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3.  The complaint seeks a final judgment ordering Aggarwal, Bolandian, and Sadigh to pay disgorgement of their ill-gotten gains plus prejudgment interest and penalties, and permanent injunctions from future violations of these provisions of the federal securities laws.

The SEC’s continuing investigation is being conducted by Paul E. Kim and Deborah A. Tarasevich of the Market Abuse Unit with assistance from John Rymas in the unit’s Analysis and Detection Center.  The case is being supervised by Mr. Cohen and fellow Acting Co-Chief Joseph Sansone.  The SEC’s litigation will be led by David S. Mendel and Matthew P. Cohen.

The SEC appreciates the assistance of the Criminal Fraud Section of the U.S. Department of Justice, the U.S. Attorney’s Office for the Central District of California, and the Federal Bureau of Investigation.

SEC ANNOUNCES MAN CONVICTED OF INSIDER TRADING RECEIVES HOME CONFINEMENT SENTENCE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23323 / August 19, 2015

Securities and Exchange Commission v. Eric McPhail, et al., Civil Action No. 1:14-cv-12958 (District of Massachusetts, Complaint filed July 11, 2014)

Defendant in SEC Insider Trading Case Sentenced by Massachusetts Federal Court in Parallel Criminal Action

The Securities and Exchange Commission announced that, on August 17, 2015, Douglas Parigian was sentenced to eight months of home confinement and 3 years of supervised release for his role in an insider trading ring that traded on inside information about Massachusetts-based American Superconductor Corporation. Parigian had previously pled guilty to criminal charges of conspiracy and securities fraud for his conduct. The criminal charges against Parigian arose out of the same conduct that is the subject of a civil insider trading action filed by the Commission against Parigian and others in July 2014.

The U.S. Attorney's Office for the District of Massachusetts indicted Parigian and another defendant, Eric McPhail, in a Superseding Information dated May 11, 2015. The Information charged that McPhail had a history, pattern and practice of sharing confidences with an individual who had material, nonpublic information concerning American Superconductor's quarterly earnings and other business activities (the "Inside Information"). This individual provided McPhail with the Inside Information with the understanding that it would be kept confidential. Instead, McPhail used email and other means to provide the Inside information to his friends, including Parigian, with the intent that they profit by buying and selling American Superconductor stock and options. Parigian used this information to profit on the purchase and sale of American Superconductor stock and options.

In July 2014, the Commission filed a civil injunctive against Eric McPhail and six of his golfing buddies, including Parigian, alleging that McPhail repeatedly provided non-public information about American Superconductor. McPhail's source was an American Superconductor executive who belonged to the same country club as McPhail and was a close friend. According to the complaint, from July 2009 through April 2011, the executive told McPhail about American Superconducter's expected earnings, contracts, and other major pending corporate developments, trusting that McPhail would keep the information confidential. Instead, McPhail misappropriated the inside information and tipped his friends, who improperly traded on the information. Four defendants settled the SEC's charges, without admitting or denying the allegations, by consenting to the entry of judgments permanently enjoining them from violating the antifraud provisions of the Exchange Act, paying disgorgement and civil penalties. The SEC's case against Parigian, McPhail and another individual, Jamie Meadows, is ongoing.

SEC FILES CASE AGAINST FORMER BANK OFFICIAL

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23316 / August 13, 2015

Securities and Exchange Commission v. Cedric Cañas Maillard, Civil Action No. 15-cv-6380 (S.D.N.Y.)

SEC Files Case Against Former Banco Santander Official for Insider Trading

The Securities and Exchange Commission today filed insider trading charges against a former high-ranking executive at Madrid-based Banco Santander, S.A. for trading based on material, nonpublic information about a proposed acquisition for which the Spanish investment bank was acting as an advisor and underwriter.

The SEC's complaint alleges that Cedric Cañas Maillard, a Spanish citizen and former executive advisor to Banco Santander's CEO, learned confidentially that the investment bank had been asked by one of the world's largest mining companies, BHP Billiton, to advise and help underwrite its proposed acquisition of Potash Corporation of Saskatchewan, one of the world's largest producers of fertilizer minerals. The SEC alleges that Cañas coordinated with a close friend to purchase Potash call options in a Switzerland-based brokerage account, of which Cañas was the sole beneficial owner, on August 16, 2010-the day before Potash announced that it had rejected BHP's acquisition bid. Potash stock rose more than 27% after that announcement, and Cañas sold the Potash call options three days after he purchased them for illicit net profits of $278,156.97, a gain of more than 1,400%.

The SEC previously charged Cañas with committing insider trading before the same announcement by trading Contracts-for-Difference (CFDs). After Cañas settled the prior case, the Commission staff continued to investigate other suspicious Potash trades in foreign accounts. Commission staff obtained evidence a few weeks ago revealing that Cañas was the sole beneficial owner of the Switzerland-based account that purchased options before the announcement. The SEC complaint alleges that Cañas coordinated with a friend to purchase Potash call options in that account before the public announcement of BHP's acquisition bid. Cañas and his friend rushed to fund the account and place the trades days prior to the announcement. The complaint, filed in U.S. District Court for the Southern District of New York, alleges that Cañas violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3, and seeks disgorgement of ill-gotten gains with prejudgment interest and financial penalties.

The SEC's prior complaint alleged that Cañas traded CFDs equivalent to 30,000 shares and tipped his friend, Julio Marín Ugedo, in advance of the Potash announcement. To settle that action, Cañas consented, without admitting or denying the allegations, to a judgment permanently enjoining him from violating Sections 10(b) and 14(e) of the Exchange Act and Rules 10b-5 and 14e-3 thereunder and ordering him to pay disgorgement of $960,806 and a civil penalty of $960,806. Pursuant to the Consent that Cañas signed in that action, the settlement resolved only the claims related to the specific trades identified in that complaint.

The SEC's investigation has been conducted jointly by staff in the Enforcement Division's Market Abuse Unit, the Chicago Regional Office, and the Denver Regional Office, including Kathryn A. Pyszka, Frank D. Goldman, and R. Kevin Barrett. The case was supervised by Robert Cohen and Joseph Sansone, acting co-chiefs of the Market Abuse Unit, and Timothy Warren, Associate Director of the Chicago Regional Office. The litigation is being handled by Ms. Pyszka and Mr. Goldman. The SEC appreciates the assistance of the Swiss Financial Market Supervisory Authority and the Spanish Comisión Nacional del Mercado de Valores.

SEC CHARGES ATTORNEY WITH INSIDER TRADING IN ADVANCE OF MERGER ANNOUNCEMENT

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

07/16/2015 02:10 PM EDT

The Securities and Exchange Commission charged a Pennsylvania attorney with insider trading in the stock of Harleysville Group, Inc. in advance of the 2011 announcement of a $760 million merger of Harleysville and Nationwide Mutual Insurance Company.

According to the SEC’s complaint, Herbert K. Sudfeld illegally traded on the news that sent Harleysville’s stock price up 87 percent when the merger of the two insurance companies was announced in September 2011.  At the time, Sudfeld was a real estate partner at a law firm that advised Harleysville on the merger.  Sudfeld was not involved in the merger and learned that the announcement of it was imminent from a conversation between an attorney working on the transaction and their shared legal assistant.  Sudfeld allegedly stole the inside information and purchased Harleysville stock in his and his wife’s accounts.  Once the merger was announced, Sudfeld sold all the shares he had purchased, realizing approximately $79,000 of illegal profits.

In a parallel action, the U.S. Attorney’s Office for the Eastern District of Pennsylvania today announced criminal charges against Sudfeld.

“We allege that Sudfeld breached his duties of trust and confidence owed to his law firm when he misappropriated information about the merger to enrich himself,” said Daniel M. Hawke, Chief of the Division of Enforcement’s Market Abuse Unit.  “The Commission will continue to aggressively pursue attorneys and other professionals who abuse their access to confidential information.”

The SEC’s complaint filed in federal court in Philadelphia names Sudfeld’s wife, Mary Jo Sudfeld, as a relief defendant for the purpose of recovering insider trading profits in her brokerage account through trades conducted by Sudfeld.  The complaint charges Sudfeld with violating antifraud provisions of the federal securities laws and an SEC antifraud rule.  The SEC seeks a permanent injunction and financial penalties against Sudfeld and return of allegedly ill-gotten gains and prejudgment interest from Sudfeld and Mary Jo Sudfeld.

The SEC’s investigation has been conducted by Kelly L. Gibson, Assunta Vivolo and John Rymas of the SEC’s Market Abuse Unit in the Philadelphia Regional Office.  The case is being supervised by Mr. Hawke and G. Jeffrey Boujoukos.  The litigation will be led by David A. Axelrod and John V. Donnelly of the Philadelphia Office.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Federal Bureau of Investigation.

SEC ANNOUNCES CRIMINAL CONVICTION OF INDIVIDUAL INVOLVED WITH AMATEUR GOLFER INSIDER TRADING CASE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23289 / June 17, 2015

Securities and Exchange Commission v. Eric McPhail, et al., Civil Action No. 1:14-cv-12958 (District of Massachusetts, Complaint filed July 11, 2014)

United States v. Eric McPhail and Douglas Parigian, 1:14-cr-10201-DJC (District of Massachusetts filed July 9, 2014)

Jury in Criminal Case Convicts Individual in Insider Trading Case Involving Group of Amateur Golfers

The Securities and Exchange Commission announced that, on June 16, 2015, a federal jury in Massachusetts convicted Eric McPhail of criminal charges of conspiracy and securities fraud for his role in an insider trading ring that traded on inside information about Massachusetts-based American Superconductor Corporation. The criminal charges against McPhail arose out of the same fraudulent conduct for which the Commission instituted a securities fraud action against him and others during July 2014.

The U.S. Attorney's Office for the District of Massachusetts indicted McPhail and another defendant, Douglas Parigian, in July 2014. The indictment alleged that McPhail had a history, pattern and practice of sharing confidences with an individual who had material, nonpublic information concerning American Superconductor's quarterly earnings and other business activities (the "Inside Information"). This individual provided McPhail with the Inside Information with the understanding that it would be kept confidential. Instead, McPhail used email and other means to provide the Inside information to his friends, including Parigian, with the intent that they profit by buying and selling American Superconductor stock and options. Parigian, who used this information to profit on the purchase and sale of American Superconductor stock and options, pled guilty to criminal securities fraud and conspiracy charges on May 13, 2015.

In July 2014, the Commission filed a civil injunctive against Eric McPhail and six of his golfing buddies, including Parigian, alleging that McPhail repeatedly provided non-public information about American Superconductor. McPhail's source was an American Superconductor executive who belonged to the same country club as McPhail and was a close friend. According to the complaint, from July 2009 through April 2011, the executive told McPhail about American Superconducter's expected earnings, contracts, and other major pending corporate developments, trusting that McPhail would keep the information confidential. Instead, McPhail misappropriated the inside information and tipped his friends, who improperly traded on the information. Four defendants settled the SEC's charges, without admitting or denying the allegations, by consenting to the entry of judgments permanently enjoining them from violating the antifraud provisions of the Exchange Act, paying disgorgement and civil penalties. The SEC's case against Parigian, McPhail and another individual, Jamie Meadows, is ongoing.

SEC ANNOUNCES THAT A SWISS TRADER WILL PAY OVER $2.8 MILLION TO SETTLE INSIDER TRADING CHARGES

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION

06/15/2015 12:50 PM EDT

The Securities and Exchange Commission announced that a Swiss trader has agreed to pay more than $2.8 million to settle charges that he traded on nonpublic information ahead of a Florida-based biometrics company’s acquisition by Apple Inc.

A SEC investigation found that Helmut Anscheringer purchased stock and call options in AuthenTec Inc. upon learning from a longtime friend related to an AuthenTec executive that Apple proposed to buy the company, which provided fingerprint sensors and software for use in electronic devices.  The call options accounted for nearly all of the series volume on the days he purchased them.  Just days later, AuthenTec publicly announced that it had agreed to become a wholly-owned subsidiary of Apple for $355 million in cash.  The positive news led to the stock price closing approximately 60 percent higher than the previous day.  Through his unlawful trading, Anscheringer garnered more than $1.8 million in illicit profits.

“Anscheringer attempted to profit by freely trading on inside information,” said Glenn Gordon, Associate Director of the SEC’s Miami Regional Office.  “Foreign traders in U.S. stocks are not exempt from SEC scrutiny as we traced the misconduct back to Anscheringer when investigating these significant purchases in a trading account belonging to an entity in the British Virgin Islands for which he was listed as the beneficiary.”

The SEC’s order instituting a settled administrative proceeding finds that Anscheringer, who lives in Basel, Switzerland, violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  Without admitting or denying the findings, Anscheringer agreed to pay disgorgement of $1,820,024, prejudgment interest of $121,732, and a penalty of $910,012 for a total of $2,851,768.  He must cease and desist from committing or causing any violations and any future violations of the antifraud provisions of the federal securities laws.

The SEC’s continuing investigation is being conducted by Sunny H. Kim and Kathleen E. Strandell in the Miami Regional Office with assistance from Mathew Wong of the Market Abuse Unit in the New York Regional Office.  The case is being supervised by Jason R. Berkowitz and the litigation is being led by Robert K. Levenson.  The SEC appreciates the assistance of the Swiss Financial Market Supervisory Authority, Options Regulatory Surveillance Authority, and Financial Industry Regulatory Authority.

SEC CHARGES THREE WITH INSIDER TRADING RELATED TO STOCK,OPTIONS OF BIOTECH COMPANY

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

06/09/2015 03:00 PM EDT

The Securities and Exchange Commission charged three men living in California with insider trading in the stock and options of a biotechnology company where one of them worked.

The SEC alleges that Michael J. Fefferman learned material nonpublic information as senior director of information technology at Ardea Biosciences Inc.  He tipped his brother-in-law Chad E. Wiegand in advance of major public announcements related to two pharmaceutical trials, a licensing agreement for a cancer drug, and eventually the acquisition of the company by AstraZeneca PLC.  Wiegand, a stockbroker, purchased Ardea stock in various customer accounts based on the confidential information he received from Fefferman, and he tipped his friend and fellow stockbroker Akis C. Eracleous so he could similarly buy stock on behalf of his customers.  The alleged insider trading resulted in illegal profits of approximately $530,000.

One of Eracleous’s customers, his cousin, has been named as a relief defendant in the SEC’s complaint for the purpose of recovering insider trading profits in his brokerage account.  The cousin agreed to pay back the entire amount of illicit profits in his account totaling $219,175 in disgorgement and interest.

Fefferman, Wiegand, and Eracleous have agreed to settlements that are subject to court approval.  Disgorgement, prejudgment interest, and penalties will be determined at a later date.  Wiegand and Eracleous have agreed to be barred from the securities industry.

In a parallel action, the U.S. Attorney’s Office for the Southern District of California today announced criminal charges against Wiegand and Eracleous.

“As a corporate insider, Fefferman breached his duty to Ardea’s shareholders by tipping confidential information about significant corporate events before they were announced,” said Sharon B. Binger, Director of the SEC’s Philadelphia Regional Office.  “Wiegand and Eracleous took unfair advantage of the investing public by trading on confidential company knowledge unknown to others.”

According to the SEC’s complaint filed in federal court in San Diego, the insider trading occurred from April 2009 to April 2012.  The complaint charges Fefferman, Wiegand, and Eracleous with violating the antifraud provisions of the federal securities laws.

The SEC’s continuing investigation is being conducted by Patricia A. Paw, John S. Rymas, and Daniel Koster in the Philadelphia office.  The case is being supervised by Brendan P. McGlynn, and the litigation will be led by David L. Axelrod and Michael J. Rinaldi.  The SEC appreciates the assistance of the U. S. Attorney’s Office for the Southern District of California, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.

SEC ANNOUNCES FOUR CHARGED INCLUDING BANK DIRECTOR FOR ROLES IN INSIDER TRADING CASE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23278 / June 8, 2015

Securities and Exchange Commission v. Anthony Andrade, et al., Civil Action No. 15-cv-231 (District of Rhode Island, Complaint filed June 8, 2015)

SEC Charges Director of Rhode Island Bank and Three Others with Insider Trading

The Securities and Exchange Commission today charged Anthony Andrade, a former member of the board of directors of Bancorp Rhode Island, Inc., formerly a publicly-traded bank headquartered in Rhode Island, with tipping inside information about the bank's potential acquisition to three friends and close business associates. The SEC alleges that those individuals then traded on this information and collectively profited by over $80,000 from their insider trading. Two of the traders have agreed to settle the SEC's charges.

According to the SEC's complaint, filed in federal court in Providence, Rhode Island, Bancorp Rhode Island and Massachusetts-based Brookline Bancorp, Inc., publicly announced on April 20, 2011, that Brookline Bancorp would acquire Bancorp Rhode Island. According to the complaint, this acquisition announcement was preceded by weeks of confidential negotiations soliciting the sale of Bancorp Rhode Island, which were led by Bancorp Rhode Island's management and its board of directors, including Andrade.

According to the SEC's complaint, Andrade, of Rehoboth, Massachusetts, illegally tipped inside information about the Bancorp Rhode Island's potential acquisition to his friends and business associates: Robert Kielbasa of Portsmouth, Rhode Island, Fred Goldwyn of Wilmington, Delaware, and Kenneth Rampino of Seekonk, Massachusetts. The complaint alleges that each of the three traded on the inside information Andrade supplied to them, and profited when Bancorp Rhode Island's stock price significantly increased after the April 20, 2011, acquisition announcement. On the day of the acquisition announcement, Bancorp Rhode Island's stock closed at $44 per share, an increase of $13.29 per share, or forty three percent, from the prior day's closing price.

The complaint charges that Andrade, Kielbasa, Goldwyn, and Rampino violated Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, and seeks to have them be enjoined, disgorge their allegedly ill-gotten gains with interest, and pay civil penalties of up to three times their gains. The complaint further seeks to bar Andrade from serving as an officer or director of a public company.

Goldwyn and Kielbasa agreed to settle the SEC's charges, without admitting or denying the allegations, by consenting to the entry of judgments permanently enjoining them from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The judgments also order:

Kielbasa to disgorge $39,645 in trading profits plus prejudgment interest of $5,335 and a civil penalty of $39,645, for a total of $84,625.

Goldwyn to disgorge $23,565 in trading profits plus prejudgment interest of $3,171 and a civil penalty of $23,565, for a total of $50,301.
The SEC's investigation was conducted by William Donahue and Paul Block of its Boston Regional Office. Litigation of this matter will be led by Richard Harper and Kathleen Shields, also of the SEC's Boston Regional Office.

FOUR CHARGED BY SEC WITH INSIDER TRADING AND STEALING CONFIDENTIAL INFORMATION

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

06/03/2015 10:45 AM EDT

The Securities and Exchange Commission announced insider trading charges against four individuals stealing confidential information from investment banks and their public company clients in order to trade in advance of secondary stock offerings.  The scheme allegedly involved at least 15 stocks and generated more than $4.4 million in illegal trading profits.

The SEC alleges that a former day trader living in California, Steven Fishoff, schemed with two friends and his brother-in-law to pose as legitimate portfolio managers and induce investment bankers to bring them “over the wall” and share confidential information about an upcoming secondary offering.  After promising they wouldn’t disclose the nonpublic information to others or trade an issuer’s stock before an offering was announced, they violated the agreements and tipped each other about the upcoming offerings expected to inherently depress the price of the issuer’s stock.  The tippees then shorted the stock before an offering was publicly announced and assured themselves profits on the short sales after the stock price dropped.

According to the SEC’s complaint filed in U.S. District Court for the District of New Jersey, they eventually expanded the scope of their scheme from short selling to buying stock in advance of a positive corporate news announcement based on confidential information obtained about secret negotiations between two large pharmaceutical companies.

Charged along with Fishoff in the SEC’s complaint is his brother-in-law Steven Costantin of New Jersey, his friend and California neighbor Ronald Chernin, and his friend Paul Petrello, also a former day trader who resides in Florida.  In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Fishoff, Petrello, Chernin, and Costantin.

“We allege an insider trading scheme based on a short-selling business model designed to systematically profit on confidential information obtained under false pretenses,” said Sanjay Wadhwa, Senior Associate Director for Enforcement in the SEC’s New York Regional Office.  “But the defendants’ short selling proved to be short-sighted as they overlooked the fact that their trading patterns would be detected and they would be caught by law enforcement.”

The SEC’s complaint charges Fishoff, Petrello, Chernin, and Costantin as well as seven entities they collectively controlled with illegal insider trading in violation of the antifraud provisions of the Securities Act of 1933 and Securities Exchange Act of 1934.  The complaint also charges Fishoff, Petrello, Chernin, Costantin, and three associated entities with violations of Rule 105 of Regulation M of the Exchange Act in connection with certain short sales made in advance of public securities offerings in which they purchased shares.

The SEC’s investigation is continuing and being conducted by Dominick Barbieri, David Austin, Matthew Lambert, Stephen Johnson and George Stepaniuk.  The litigation will be led by Todd Brody, Dominick Barbieri, and David Austin.  The case is being supervised by Mr. Wadhwa.  The SEC appreciates the assistance of the Financial Industry Regulatory Authority, U.S. Attorney’s Office for the District of New Jersey, Federal Bureau of Investigation, and Options Regulatory Services Authority.

DEFENDANT IN INSIDER TRADING CASE INVOLVING AMATEUR GOLFERS PLEADS GUILTY

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23264 / May 18, 2015

Securities and Exchange Commission v. Eric McPhail, et al., Civil Action No. 1:14-cv-12958 (District of Massachusetts, Complaint filed July 11, 2014)

United States v. Eric McPhail and Douglas Parigian, 1:14-cr-10201-DJC (District of Massachusetts filed July 9, 2014).

Defendant in SEC Insider Trading Case Involving Group of Amateur Golfers Pleads Guilty to Criminal Charges

The Securities and Exchange Commission announced that, on May 13, 2015, Douglas Parigian pleaded guilty to criminal charges of conspiracy and securities fraud for his role in an insider trading ring involving trading in the stock of Massachusetts-based American Superconductor Corporation. The criminal charges against Parigian arose out of the same fraudulent conduct alleged by the Commission in a civil securities fraud action filed against Parigian and others in July 2014.

On July 9, 2014, the U.S. Attorney's Office for the District of Massachusetts indicted Parigian and another defendant, Eric McPhail, for conspiracy and securities fraud and, for Parigian only, lying to FBI agents. The U.S. Attorney charged that McPhail had a history, pattern and practice of sharing confidences with a senior executive at American Superconductor. Between 2009 and 2011, the senior executive provided McPhail with material, nonpublic information concerning the company's quarterly earnings and other business activities (the "Inside Information") with the understanding that it would be kept confidential. Instead, McPhail used email and other means to provide the Inside Information to his friends, including Parigian, with the intent that they profit by buying and selling American Superconductor stock and options. Parigian used the Inside Information to profit on the purchase and sale of American Superconductor stock and options.

On July 11, 2014, the Commission filed a civil injunctive against Eric McPhail and six of his golfing buddies, including Parigian, alleging that McPhail repeatedly provided them with material nonpublic information about American Superconductor. According to the Commission's Complaint, McPhail's source of the information was an American Superconductor executive who belonged to the same country club as McPhail and was a close friend. The Complaint further alleged that, from July 2009 through April 2011, the executive told McPhail about American Superconductor's expected earnings, contracts, and other major pending corporate developments, trusting that McPhail would keep the information confidential. McPhail instead misappropriated the information and tipped his friends, who improperly traded on the information. Without admitting or denying the allegations, four defendants settled the SEC's charges by consenting to the entry of judgments permanently enjoining them from violating the antifraud provisions of the Securities Exchange Act of 1934, paying disgorgement and civil penalties. The SEC's case against Parigian, McPhail and another individual, Jamie Meadows, is ongoing.

MICROSOFT EMPLOYEE AND FRIEND RESOLVE ALLEGATIONS OF INSIDER TRADING

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation ReleaSe No. 23261 / May 14, 2015

Securities and Exchange Commission v. Brian D. Jorgenson, et al., Civil Action No. 13-cv-02275 (W.D. Wash.)

Former Microsoft Employee and His Friend Resolve Insider Trading Case

The Securities and Exchange Commission today announced that a former Microsoft employee and his friend have agreed to settle insider trading charges filed in 2013 alleging that they unlawfully traded based on material nonpublic information misappropriated from Microsoft.

In consent judgments approved by the U.S. District Court for the Western District of Washington, Brian D. Jorgenson, a former Senior Portfolio Manager in Microsoft's corporate finance and investments division, and Sean T. Stokke, Jorgenson's long-time friend and business partner, admitted their unlawful conduct and consented to the entry of orders holding them jointly and severally liable for over $400,000 in ill-gotten gains realized from their illegal trading as well as prejudgment interest. Both men are enjoined from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Jorgenson is also barred from acting as an officer or director of a public company.

Both men previously pled guilty to criminal charges arising out of the same conduct. Jorgenson was sentenced to 24 months in jail and Stokke was sentenced to 18 months in jail.

The SEC's litigation has been led by John V. Donnelly III and G. Jeffery Boujoukos of the SEC's Philadelphia Regional Office. The SEC's investigation was conducted by Brendan P. McGlynn, Patricia A. Paw, John S. Rymas, and Daniel L. Koster.

The SEC appreciates the assistance of the US Attorney's Office for the Western District of Washington, Federal Bureau of Investigation, Options Regulatory Surveillance Authority, and Financial Industry Regulatory Authority.

SEC CHARGED FATHER AND SON WITH CONDUCTING SERIAL INSIDER TRADING VIA GOLF DISCUSSIONS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

05/14/2015 03:40 PM EDT

The Securities and Exchange Commission today charged a father and son in New York with conducting a serial insider trading scheme involving tips of key nonpublic information in coded e-mail messages disguised as discussions about golf.

The SEC alleges that Sean R. Stewart, currently a managing director at a prominent investment bank, routinely tipped his father Robert K. Stewart with confidential information about future mergers and acquisitions involving clients of two investment banks where he has worked during the past few years.  The elder Stewart, a certified public accountant and CFO of a technology company, cashed in on the tips by placing and directing highly profitable securities trades ahead of at least a half-dozen merger and acquisition announcements.  The scheme generated approximately $1.1 million in illicit proceeds in a four-year period.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against the Stewarts.

According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Robert Stewart recruited a trading partner to help him hide his illegal trading and the connection to his son as the source of the nonpublic information about investment bank clients.  Trades were conducted in the partner’s account, and the illicit profits were shared in the form small cash payments to Robert Stewart to avoid creating a clear paper trail of the kickbacks.  They also spread trades over numerous stock options series in an attempt to avoid raising red flags with regulators.

“Serial insider traders assume a huge risk that we will detect their pattern of trading and connect them to their source of confidential information,” said Daniel M. Hawke, Chief of the Division of Enforcement’s Market Abuse Unit.  “We have integrated new technological tools to quickly and easily identify relationships among traders and spot suspicious trading across multiple securities.”

According to the SEC’s complaint, there were additional ways that Robert Stewart and his fellow trader attempted to conceal the scheme and evade detection when sharing nonpublic information obtained from Sean Stewart about investment bank clients.  They primarily met in-person or used coded e-mail messages to discuss the scheme and trading plans.  Among examples of e-mail text using golf terminology were “saw local story about high cost of golf reservations since a foreign company purchased all- even more expensive than imagined” and “might have an opportunity to play golf- but would need to book the reservation as soon as the office opens Tuesday morning.”

The SEC’s complaint charges Sean and Robert Stewart with violations of the antifraud provisions of the federal securities laws.

The SEC’s investigation, which is continuing, has been conducted by Kelly L. Gibson, David W. Snyder, and John S. Rymas of the Market Abuse Unit in the Philadelphia Regional Office.  The case has been supervised by Mr. Hawke and Joseph G. Sansone, Co-Deputy Chief of the Market Abuse Unit.  The litigation will be led by David L. Axelrod, Regional Trial Counsel, and Catherine E. Pappas, Senior Trial Counsel, in the Philadelphia office.  The SEC appreciates the assistance of the U.S. Attorney’s Office in the Southern District of New York, Federal Bureau of Investigation, and Financial Industry Regulatory Authority.

TWO CHARGED BY SEC FOR INSIDER TRADING CHINESE INTERNET COMPANY

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23249 / April 29, 2015

Securities and Exchange Commission v. Xiaoyu Xia and Yanting Hu, Civil Action No. 15-CV-3320

SEC Charges Two with Insider Trading On Chinese Internet Company 58.Com Merger News

The Securities and Exchange Commission today announced insider trading charges and an emergency asset freeze based on trading prior to the announcement of a merger between two Chinese e-commerce companies, 58.com and ganji.com. When the merger was reported on April 14, 2015, the share price of 58.com increased by more than a third, and trading volume increased more than twenty-fold.

The SEC alleges that Dr. Xiaoyu Xia and Ms. Yanting Hu, residents of Beijing, China, each purchased out-of-the-money call options in 58.com in the time period between when 58.com, ganji.com, and 58.com's largest shareholder, Tencent Holdings, agreed to the merger and when the merger was first reported on April 14, 2015. The defendants each traded through U.S. brokerage accounts and their purchase of speculative, out-of-the-money call options in 58.com resulted in combined realized and unrealized profits totaling over $2 million. Defendants are both connected to the financial industry in China.

The United States District Court for the Southern District of New York granted the SEC's request for an asset freeze against monies held in Xia and Hu's United States brokerage accounts, and issued an order to show cause why an injunction and other miscellaneous relief should not issue. A hearing has been scheduled for May 6, 2015.

The SEC's complaint charges the defendants with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks permanent injunctions, disgorgement, civil money penalties, and other relief.

The SEC's investigation, which is continuing, has been conducted by L. James Lyman and Jeffrey D. Felder of the Denver Regional Office, with supervision by Ian S. Karpel. The SEC's litigation is led by Dugan Bliss with supervision by Gregory Kasper.

SEC CHARGES FRIENDS WITH INSIDER TRADING REGARDING COOPER TIRE COMPANY ACQUISITION

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

04/02/2015 12:30 PM EDT

The Securities and Exchange Commission charged two longtime friends who illegally profited from insider trading on news of a proposed acquisition of Cooper Tire and Rubber Company by Apollo Tyres Ltd.

In a complaint filed in U.S. district court in Connecticut, the SEC filed fraud charges against Amit Kanodia, of Brookline, Massachusetts, an entrepreneur and private equity investor, and Iftikar Ahmed, of Greenwich, Connecticut, a general partner at a venture capital firm.  The SEC named Rakitfi Holdings LLC, a company owned by Ahmed, and Lincoln Charitable Foundation, a supposed charity operated by Kanodia, as relief defendants.  The SEC is seeking to have the defendants return their allegedly ill-gotten gains with interest and pay civil monetary penalties.

The U.S. Attorney’s Office for the District of Massachusetts announced parallel criminal charges against Kanodia and Ahmed.

The SEC alleges that by April 2013, India-based Apollo Tyres was engaged in serious negotiations to acquire Cooper Tire, of Findlay, Ohio.  Although the acquisition was never completed, the complaint alleges that Cooper Tire’s stock price jumped 41 percent when the acquisition was announced in June 2013.  The SEC alleges that Kanodia tipped Ahmed and another friend prior to the acquisition announcement after learning of the deal from his wife, then the general counsel at Apollo who was intimately involved in Apollo’s efforts to acquire Cooper Tire.

According to the SEC’s complaint, Kanodia shared the highly confidential information with Ahmed who began buying significant amounts of Cooper Tire stock and options.  Once news of the deal was public, Ahmed immediately liquidated his Cooper Tire holdings, reaping more than $1.1 million of ill-gotten profits, according to the complaint.  Ahmed later paid Kanodia a kickback by transferring $220,000 to Lincoln Charitable Foundation, a supposed charity that Kanodia controlled and used to mask the kickback, the complaint alleges.

A second close friend of Kanodia, identified in the complaint as Tippee 1, also profited by trading on the confidential information provided by Kanodia and paid a portion of his illicit gains to Kanodia using the same supposed charity, the SEC’s complaint further alleges.

“We allege that Kanodia gave inside information to two close friends who then kicked back a portion of their insider trading profits to a supposed charity that Kanodia controlled,” said Joseph G. Sansone, Co-Deputy Chief of the SEC Enforcement Division’s Market Abuse Unit.  “Despite Kanodia’s attempts at concealment, the SEC staff was able to uncover and unravel the scheme.”

The SEC’s complaint charges Kanodia and Ahmed with violating federal anti-fraud laws and a related SEC ant-fraud rule. Rakitfi Holdings and Lincoln Charitable Foundation are named as relief defendants in the SEC’s complaint for the purpose of recovering ill-gotten gains from the trading.

The SEC’s investigation, which is continuing, has been conducted by Jay A. Scoggins and Jeffrey E. Oraker of the Market Abuse Unit in the Denver Regional Office with assistance from Patrick A. McCluskey of the Market Abuse Unit in the Philadelphia Regional Office.  The case has been supervised by Daniel M. Hawke, Chief of the Market Abuse Unit, and Mr. Sansone, and the litigation will be led by Nicholas P. Heinke and Mark L. Williams of the Denver Regional Office.  The SEC appreciates the assistance of the U.S. Attorney’s Office in Boston, the U.S. Attorney’s Office in Connecticut, the Federal Bureau of Investigations, and FINRA, the Financial Industry Regulatory Authority.

SEC CHARGES FORMER EXEC. OF FORTUNE 500 COMPANY WITH INSIDER TRADING

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

02/19/2015 03:20 PM EST

The Securities and Exchange Commission announced insider trading charges against a former Fortune 500 company executive and his brother-in-law whom he allegedly tipped with nonpublic information ahead of the company’s merger.

The SEC alleges that while serving as vice president of construction operations at Baton Rouge-based The Shaw Group, Scott Zeringue traded company securities based on confidential information he learned on the job about an impending acquisition by Chicago Bridge & Iron Company.  In the weeks leading up to the public announcement of the merger, Zeringue purchased 125 shares of Shaw common stock and asked his brother-in-law Jesse Roberts III, a dentist who lives in Ruston, La., to also purchase Shaw stock on his behalf.

Zeringue, Roberts, and others subsequently tipped by Roberts allegedly made nearly $1 million in combined illicit profits after the merger announcement caused the price of Shaw stock to increase by more than 55 percent.

In a parallel action, the U.S. Attorney’s Office for the Middle District of Louisiana today announced criminal charges against Roberts.  Zeringue previously pled guilty to criminal charges and has agreed to settle the SEC’s charges by paying disgorgement of his ill-gotten trading profit of $32,006 plus a penalty of $64,012.  He will be prohibited from serving as an officer or director of a publicly-traded company for 10 years.  The settlement is subject to court approval.

“As charged in our complaint, Zeringue betrayed his duty to his company and its shareholders by tipping his brother-in-law with nonpublic information,” said Stephen L. Cohen, Associate Director in the SEC’s Division of Enforcement.   “Armed with this inside knowledge, Roberts loaded up on option contracts that he knew would earn him a huge but illegal profit.”

According to the SEC’s complaint filed in U.S. District Court for the Western District of Louisiana, the insider trading occurred in the summer of 2012.  Roberts reaped more than $765,000 through his illicit trading of call option contracts, and others made more than $154,000 from trading based on his tips.  Roberts rewarded Zeringue for the original tip by giving him $30,000 in cash in November 2013.  The SEC’s complaint charges Zeringue and Roberts with violations of the antifraud provisions of the federal securities laws.

The SEC’s continuing investigation is being conducted by Louis J. Gicale Jr. and Roger Paszamant under the supervision of Melissa A. Robertson.  The SEC’s litigation against Roberts will be led by Derek Bentsen.  The SEC appreciates the assistance of the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Middle District of Louisiana as well as the U.S. Secret Service, Internal Revenue Service Criminal Investigation, Options Regulatory Surveillance Authority, and Financial Industry Regulatory Authority.

SEC ANNOUNCES CHARGES AGAINST MANY FOR INSIDER TRADING OBTAINED FROM A FRIEND OF A COMPANY EXECUTIVE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission announced charges against an Atlanta resident accused of insider trading in the stock of a technology company by exploiting nonpublic information he learned from the friend of a company executive.

The SEC’s Enforcement Division alleges that Charles L. Hill Jr. made approximately $740,000 in illicit profits by trading in Radiant Systems stock on the basis of confidential inside information about an impending tender offer by NCR Corporation to buy the company.  Hill was aware that his friend who shared this nonpublic information also was a friend of a Radiant Systems executive.  Hill purchased approximately 100,000 Radiant Systems shares that were valued at nearly $2.2 million on the last trading day before the acquisition was publicly announced in July 2011.  Hill had not purchased equity securities in the previous four years, and had never before bought Radiant Systems stock.

“The SEC has rules designed to protect against misuse of nonpublic tender offer information.  We will take action against individuals who acquire such information from insiders and exploit it for their own trading benefit,” said William P. Hicks, Associate Regional Director of the SEC’s Atlanta office.

The SEC’s Enforcement Division alleges that Hill violated Section 14(e) of the Securities Exchange Act of 1934 and Rule 14e-3.  The matter will be scheduled for a public hearing before an administrative law judge for proceedings to adjudicate the Enforcement Division’s allegations and determine what, if any, remedial actions are appropriate.

The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

SEC CHARGES 4 WITH HAVING ROLES IN INSIDER TRADING RING SCHEME

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

02/05/2015 12:45 PM EST

The Securities and Exchange Commission today charged a stock research analyst, a corporate insider, and two others involved in a California-based insider trading ring that generated nearly $750,000 in illegal profits by trading in advance of four corporate news announcements.

The SEC alleges that John Gray, then an analyst at Barclays Capital, and his friend Christian Keller traded on confidential merger information that Keller learned while working in finance at two Silicon Valley-based public companies.  Gray and Keller attempted to conceal the trades by placing them in a brokerage account held in the name of Gray’s friend Kyle Martin.  Gray also tipped a fourth participant, Aaron Shepard, with nonpublic information so he could trade in advance of some of the corporate announcements.
Gray, Keller, Martin, and Shepard have agreed to settle the SEC’s charges by paying more than $1.6 million combined.

“Gray and Keller tried to evade detection by trading in another person’s name, using prepaid disposable phones, and making structured cash withdrawals to share profits,” said Jina L. Choi, Director of the SEC’s San Francisco Regional Office.  “Despite their careful planning, we were able to detect the suspicious trading and effectively use our cooperation program to expose their nefarious scheme.”

According to the SEC’s complaint filed in federal court in the Northern District of California, Gray was primarily responsible for placing the trades in Martin’s account.  Gray and Martin also placed additional trades in other accounts based on Keller’s confidential information that Gray shared with Martin.  Gray provided Keller kickbacks in cash from the trading profits.

The SEC alleges that Gray and Keller first traded on confidential merger information that Keller learned while employed as a financial analyst at Applied Materials Inc.  They illegally traded ahead of the company’s acquisitions of Semitool Inc. in 2009 and Varian Semiconductor Equipment Associates in 2011.  Keller left Applied Materials and joined Rovi Corporation in 2012 as a vice president for investor relations and finance.  The scheme continued as they used confidential information that Keller learned as an insider to profitably trade Rovi securities ahead of negative news announcements by the company about its 2012 first and second quarter financial results.

Gray, Keller, Martin, and Shepard agreed to make the following payments to settle the case, without admitting or denying the allegations.  The settlements are subject to court approval.

• Gray agreed to pay disgorgement of $287,487.55, prejudgment interest of $21,836.88, and a penalty of $448,876.03.  Gray also agreed to be barred from the securities industry and from participating in penny stock offerings.
• Keller agreed to pay disgorgement of $52,000, prejudgment interest of $4,002.03, and a penalty of $417,468.73, which represents the total profits from the secret trades placed in Martin’s brokerage account.  Keller also agreed to be barred from serving as an officer or director of a public company for 10 years.
• Martin agreed to pay disgorgement of $243,276.10 plus prejudgment interest of $21,404.28, and Shepard agreed to pay disgorgement of $161,388.36 plus prejudgment interest of $9,633.07.  They are not being assessed additional penalties due to their significant cooperation during the SEC’s investigation.

The SEC’s investigation was conducted by Jennifer J. Lee and supervised by Steven Buchholz of the San Francisco Regional Office with assistance from John Rymas of the Market Abuse Unit of the Philadelphia Regional Office.  The SEC appreciates the assistance of the Financial Industry Regulatory Authority, and the Options Regulatory Surveillance Authority.

SEC CHARGES MAN WITH TRADING BASED ON NONPUBLIC INFORMATION

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23187 / February 3, 2015

Securities and Exchange Commission v. Joel J. Epstein, Civil Action No. 15-cv-0506

SEC Charges Pennsylvania Man with Insider Trading

The Securities and Exchange Commission today charged Joel J. Epstein of Huntingdon Valley, Pennsylvania with insider trading based on material nonpublic information that Epstein misappropriated from his son regarding Nationwide Mutual Insurance Company's merger with Harleysville Group, Inc. On the morning of September 29, 2011, Nationwide and Harleysville, a Pennsylvania-based insurance provider, announced that Nationwide would acquire all publicly-traded shares of Harleysville for $60 per share. At the end of trading on September 29, Harleysville's stock price closed at $58.96, approximately 87% higher than the previous day's close. Epstein has agreed to settle the matter. The settlement is pending final approval by the court.

According to the SEC's complaint filed in the U.S. District Court for the Eastern District of Pennsylvania, Epstein's son learned about the impending Harleysville merger from his long-time girlfriend who was a legal assistant at a law firm that was advising Harleysville on the transaction. On or before September 2, 2011, Epstein's son told him the information he learned from his girlfriend. The complaint further alleges that, between September 2 and September 28, 2011, in breach of a duty of trust and confidence owed to his son, Epstein misappropriated the information that he received from his son and purchased 4,000 shares of Harleysville stock. Epstein sold the shares after the public announcement of the acquisition, realizing ill-gotten gains of $113,503.

The SEC's complaint also alleges that Epstein tipped four people who each purchased 1,000 shares of Harleysville stock between September 21 and September 26, 2011. All four tippees sold their shares on the day of the public announcement, realizing total ill-gotten gains of $123,511.

Epstein has consented to the entry of a final judgment permanently enjoining him from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and requiring him to pay disgorgement of $237,014, the amount of his and his tippees' ill-gotten gains, plus prejudgment interest of $21,599, and a civil penalty of $237,014.

The SEC's investigation, which is continuing, has been conducted by Kelly L. Gibson, Assunta Vivolo and John Rymas of the SEC's Market Abuse Unit along with John V. Donnelly of the Philadelphia Regional Office. The case has been supervised by Daniel M. Hawke, Chief of the Market Abuse Unit, and G. Jeffrey Boujoukos. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of Pennsylvania, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority (FINRA).

FUND MANAGER SETTLES SEC INSIDER TRADING CASE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23151 / December 8, 2014

Securities and Exchange Commission v. Reema D. Shah and Robert W. Kwok, Civil Action No. 12-CV-4030 (S.D.N.Y.) (ALC)

Former Ameriprise Fund Manager Settles SEC Insider Trading Case

The Securities and Exchange Commission announced today that on December 8, 2014, the Honorable Andrew L. Carter, Jr. of the United States District Court for the Southern District of New York entered a final judgment against Reema D. Shah in SEC v. Reema D. Shah and Robert W. Kwok, 12-CV-4030, an insider trading case the SEC filed on May 21, 2012. The SEC alleged that Shah, a former mutual fund and hedge fund portfolio manager at RiverSource Investments, LLC, an investment adviser subsidiary of Ameriprise Financial, Inc., illegally tipped and traded on material, nonpublic information concerning Yahoo! Inc. and Moldflow Corporation.

The SEC's complaint alleged that in July 2009, Robert W. Kwok, a former Senior Director of Business Management at Yahoo, tipped Shah material, nonpublic information concerning an upcoming announcement of an internet search engine partnership agreement between Yahoo and Microsoft Corporation. The SEC alleged that, based on Kwok's tip, Shah caused certain of the funds she helped manage, including the Seligman Communications and Information Fund, to purchase approximately 700,000 shares of Yahoo. The shares were later sold resulting in profits of $388,807. The SEC also alleged that in April 2008, Shah tipped Kwok material, nonpublic information concerning an upcoming acquisition of Moldflow by Autodesk, Inc., which had been misappropriated by an Autodesk insider and tipped to Shah. The SEC alleged that, based on this tip, Kwok purchased 1,500 shares of Moldflow in a personal account, which he sold after announcement of the acquisition, realizing profits of approximately $4,750. The Court previously entered a final judgment, by consent, against Kwok.

The final judgment against Shah, entered by consent, orders her to pay disgorgement of $388,807 plus prejudgment interest of $1,296, and permanently enjoins her from any future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. No penalty was imposed in light of Shah's sentence in a parallel criminal case and her cooperation. In the parallel criminal action, Shah previously pled guilty to securities fraud and conspiracy to commit securities fraud and recently was sentenced to two years of probation, and ordered to forfeit $11,751 and pay a $500,000 criminal fine. United States v. Reema Shah, 12 CR 0404 (S.D.N.Y.). In related administrative proceedings, Shah previously consented to a Commission Order barring her from association with any investment adviser, broker, dealer, municipal securities dealer or transfer agent. In the Matter of Reema D. Shah, File No. 3-15084 (Oct. 31, 2012).

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.