The Securities and Exchange Commission (SEC), concerned about its recent bad press, continues to prosecute insider trading through the Christmas season. Last week, the regulatory body charged seven individuals and two companies involved in an insider trading ring.
The SEC alleged that Matthew Devlin, formerly of Lehman Brothers, traded on and tipped
his clients and friends with confidential and non-public information about 13 impending
corporate transactions. Some of these friends, who worked in the financial or legal
professions, also tipped off other clients.
Devlin obtained the privileged information from his wife, a partner in the NYC office
of an international public relations firm working on the deals. The illicit trading
occurred from at least March 2004 through July 2008, yielding more than $4.8 million
in profits. Devlin was also rewarded with cash and luxury items in exchange for the
information, including a widescreen TV, leather jacket, and Porsche driving lessons.
The traders attempted to avoid detection by trading in the securities of the target
companies in numerous accounts that were not associated with Lehman or Devlin. To
further conceal their illicit trading, at least two of the defendants sold off some
of the shares they had purchased based on inside information prior to public announcements
of the deals. In addition, Devlin and one of his tippees arranged to buy shares on
Devlin's behalf so Devlin could profit from the nonpublic information but evade scrutiny.
The companies targeted from this scam included: InVision Technologies, Inc.; Eon Labs,
Inc.; Mylan, Inc.; Abgenix, Inc.; Aztar Corporation; Veritas, DGC, Inc.; Mercantile
Bankshares Corporation; Alcan, Inc.; Ventana Medical Systems, Inc.; Pharmion Corporation;
Take-Two Interactive Software, Inc.; Anheuser-Busch, Inc.; and Rohm and Haas Company.
"The Commission is unwavering in its determination to pursue illegal insider trading
by securities professionals, lawyers, and others," said Linda Chatman Thomsen, Director
of the SEC's Division of Enforcement. "Today's enforcement action is another example
of the exemplary working relationships among the SEC, criminal authorities, FINRA
and other self-regulatory organizations."
