SEC Charges Five for Insider Trading, Following An Alcoholic Anonymous Tipoff
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The Securities and Exchange Commission has charged five individuals for acting on insider information alleged to be illegally obtained from an Alcoholics Anonymous meeting.
According to the complaint, 5 individuals are said to be involved in unlawful insider trading in the common stock of Philadelphia Consolidated, a Pennsylvania-based insurance holding company.
The Securities and Exchange Commission has charged five individuals for acting on insider information alleged to be illegally obtained from an Alcoholics Anonymous meeting.
According to the complaint, 5 individuals are said to be involved in unlawful insider trading in the common stock of Philadelphia Consolidated, a Pennsylvania-based insurance holding company.
Prior to the Company’s July 2008 public announcement of its sale to Tokio Marine, the 5 individuals charged, of which two are based in Hong Kong, acted in advance and profited from the subsequent 64 percent hike in the stock price of Philadelphia Consolidated.
[quote] In total, the SEC said the group made $1.8 million in illicit profits. [/quote]Related News: Hedge Fund Billionaire Raj Rajaratnam Sentenced 11-Years in Prison for Insider Trading
The SEC charged that Timothy McGee, a financial adviser at Ameriprise Financial Services, illegally obtained insider information from a senior Philadelphia Consolidated executive, who confided after an AA meeting that the pressure over the merger was leading him to drink.
McGee is said to have tipped off his co-worker, Michael Zirinsky, who then purchased Philadelphia Consolidated stock for himself and his extended family, starting a chain reaction that eventually leaked the information to a couple based in Hong Kong.
Without admitting or denying the SEC charges, the two Hong Kong residents have agreed to pay the SEC $1.6 million in settlement. The couple jointly took in $948,555 from the tipoff.
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Associate Director of the SEC’s Philadelphia office, Elaine Greenberg said:
[quote] McGee stole information shared with him in the utmost confidence, and as securities-industry professionals, he and Zirinsky clearly knew better. As this case demonstrates, we will follow each link in a tipping chain all the way to Hong Kong if necessary. [/quote]Ameriprise has since suspended McGee and Zirinsky as the SEC and Ameriprise conduct their respective investigations.
According to the SEC filing, McGee and the Insider had know each other for more than a decade, and forged a close relationship where they would share information about each other’s personal and professional lives.
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