This is the first of what will be recurring posts that offer quick summaries of similar cases. Think of them as the Kay and Peele version of my blog posts, though not nearly as funny and always safe for work.
SEC v. Richard Bruce Moore: The SEC charged Moore, a Toronto investment banker, with insider trading. He allegedly obtained inside information as part of his job for a subsidiary of the Canadian Imperial Bank of Commerce. One of his clients was the Canada Pension Plan Investment Board (CPPIB), which manages the $172 billion assets of the Canada Pension Fund. Mr. Moore allegedly learned from a friend at CCPIB that CCPIB was working with a Canadian private equity firm to acquire Tomkins plc, a U.K. manufacturing and engineering firm. Mr. Moore rushed out to buy Tomkins securities, both ADRs (American depositary receipt) traded on the NYSE and common stock traded on a foreign exchange. According to the SEC, he spent nearly one-third of his net worth on the securities. When Tomkins announced its acquisition by the CCPIB and a private equity firm, the ADR price increased. Mr. Moore profited by approximately $163,000.
- Case status: Mr. Moore has settled with the SEC by paying an amount over $300,000 and agreeing not to engage in investment activities.
United States v. Todd Newman: Newman is one of four defendants indicted in February 2012 for his role in an alleged scheme involving a Connecticut hedge fund, Diamondback Capital Management, and an investment company, Level Global Investors. SDNY Judge Richard Sullivan recently sentenced him to 54 months in prison for his role in the scheme, after he was convicted by a jury.
Mr. Newman was a portfolio manager at Diamondback and another defendant, Anthony Chiasson, was a co-founder of Level. The two defendants, along with others, supposedly traded tips among a group of friends and analysts that the government called a “criminal club.” The two men earned illegal profits for themselves and their companies of over $70 million. One interesting legal twist in the case is that Judge Sullivan ruled, contrary to at least one other court, that the government did not have to prove that Newman knew the insider sources for his information received some kind of benefit for the disclosure, setting up a strong issue on appeal.
- Case Status: Chiasson was also convicted by the same jury but has not yet been sentenced.
- UPDATE 5/13/13: Newman was sentenced to four and a half years in prison. Chiasson was sentenced to six and a half years in prison and ordered to pay a $5 million fine and forfeit up to $2 million in illegally-obtained proceeds.
United States v. Michael Van Gilder: Michael Van Gilder is the former CEO of Van Gilder Insurance Corp. He pleaded guilty last week to insider trading of shares in Delta Petroleum Corp. Van Gilder allegedly received insider information from the former CEO of Delta, Roger Parker. Parker apparently gave Van Gilder several insider tips, including that a private investment firm, Tracinda, was contemplating a large equity investment in Delta. Based on these tips, Van Gilder allegedly bought Delta shares and told his relatives about the tips. He earned nearly $110,000 from the trades. After he was indicted in 2012, Van Gilder sent out a fascinating email comparing himself to Nelson Mandela and Steve Jobs. On May 2, 2012, Van Gilder pleaded guilty to one count of insider trading and the government agreed to drop the remaining four counts.
- Case Status: Van Gilder is awaiting sentencing. There is a parallel SEC investigation against Van Gilder and Parker.
[…] written previously about this case; this is a particularly gratifying follow-up […]