Among recent enforcement actions by the SEC are charges against six individuals for insider trading. FINRA fined and censured Barclays Capital on options reporting failures and Edward D. Jones on inappropriate recommendations of alternative ETFs.
SEC Charges 6 With Insider Trading Prior to eBay Acquisition
The SEC has charged six individuals with insider trading in connection with the eBay's acquisition of an e-commerce company.
Christopher Saridakis, a former executive for a company that was acquired by eBay, was charged, along with five traders, with insider trading after Saridakis passed along confidential information that was spread and acted upon by friends and relatives.
Saridakis, who was CEO of the marketing solutions division of GSI Commerce, not only provided two family members and two friends with nonpublic information about the pending acquisition but also encouraged them to trade on it, resulting in ill-gotten gains of more than $300,000. The information spread in a complex web and resulted in a total of $738,635 in downstream profits.
Saridakis became aware of negotiations between GSI and eBay in early 2011, and his involvement increased when he participated in a meeting between eBay and GSI executives on March 11. In the weeks leading up to the acquisition, Saridakis tipped two family members, as well as his longtime friend and former colleague Jules Gardner. Gardner in turn shared the information with other friends who traded on it.
But Saridakis didn't stop there. He also told his friend Suken Shah about the impending deal, and Shah told his brother, who then spread the information even further.
Saridakis agreed to settle the SEC's charges and pay $664,822, which includes a penalty twice the amount of his tippees' profits; he also agreed to an officer-and-director bar. In addition, he is the target of criminal charges brought in a parallel action by the U.S. Attorney's Office for the Eastern District of Pennsylvania.
The five traders, and one individual who entered into a nonprosecution agreement with the SEC, will pay a combined total of more than $490,000 in their settlements, which range from disgorgement-only or reduced penalties for cooperators to penalties of two or three times the trading profits for other traders.
Gardner has agreed to fully disgorge his ill-gotten gains of $259,054 as part of a cooperation agreement in which the SEC is not seeking a penalty. Gardner also agreed to continue cooperating in the ongoing investigation.
Suken Shah agreed to settle the SEC's charges in an administrative proceeding by paying disgorgement of $10,446, which includes $609 in trading profits made by the other individual he tipped. He also agreed to pay prejudgment interest of $1,007 and a penalty of $64,965 for a total of $76,418.
Shimul Shah agreed to disgorge his trading profit of $11,209 and pay prejudgment interest of $1,022 and a penalty of $22,418 for a total of $34,650.
