01 Aug 2009, David Benyon, Operational Risk & Regulation
WASHINGTON, DC - The US Securities and Exchange Commission (SEC) has charged 11 individuals, including a former investment analyst for Goldman Sachs, who were allegedly involved in separate insider trading schemes that were detected through surveillance of unusual trades preceding two different company merger announcements.
The US regulator alleges that five of the accused, including the ex-Goldman banker, provided confidential inside information regarding the 2008 takeover announcement of Seattle-based insurance firm Safeco by Boston-based insurer Liberty Mutual. The other six are accused of trading information ahead of the 2005 announcement of the acquisition of Neff, a Miami-based rental equipment company, by private equity firm Odyssey Investment Partners.
"The SEC and self-regulatory organisations work together to detect and investigate suspicious trades surrounding company mergers," says Robert Khuzami, director of the SEC's division of enforcement. "These individuals traded on confidential information with reckless disregard for the fairness of the markets and utter disrespect for their jobs or close-knit relationships. But their greed left a trail for investigators to follow."
The SEC filed three separate complaints against individuals involved in insider trading schemes prior to the announcement of the Safeco acquisition. One of these complaints filed in Orlando relates to the Perez brothers. Anthony Perez is alleged to have illegally tipped off his brother Ian Perez with material non-public information that he obtained through his job at Goldman Sachs while working on a potential acquisition of Safeco for a client. Ian Perez then bought Safeco call options one day ahead of the public announcement and later sold them for a profit of more than $152,000. The Perez brothers have agreed to settle the SEC's charges without admitting or denying the allegations. Anthony Perez will pay a penalty of $25,000 and Ian Perez agreed to pay disgorgement and prejudgement interest totalling $152,992.
Two other individuals named in separate complaints have also agreed to settle the fines without admitting or denying allegations. For the remaining eight defendants, the regulator is seeking injunctions against further violations, the return of ill-gotten gains with prejudgement interest, and financial penalties.