An Unusual Insider-Trading Suspect

If anyone would know the dangers of insider trading, you'd think it would be senior officers at major exchanges that deal often with federal regulators.

A lawsuit filed today by the Securities and Exchange Commission suggests that isn't always the case.

The S.E.C. accused John F. Marshall, vice chairman of International Securities Exchange Holdings, and two other men of illegally reaping more than $1 million by trading on inside information.

The case involves the April 17, 2007, announcement of Eurex Frankfurt's $2.8 billion takeover offer for I.S.E., the second largest options market in the U.S.

According to the S.E.C.'s complaint, Marshall received detailed information regarding the confidential merger talks and tipped Mark R. Larson and Alan L. Tucker, all associates in the New York-based financial consulting firm Marshall Tucker & Associates.

"The S.E.C. will act aggressively when — as alleged in this case — those who direct registered securities exchanges misuse proprietary information for personal gain," said Linda Chatman, director of the commission's enforcement division.

The men were simultaneously charged with conspiracy to commit securities fraud by the U.S. Attorney's Office for the Southern district of New York.

Calls to the attorneys representing Marshall, Tucker, and Larson were not returned.

The S.E.C. case alleges that, after being tipped by Marshall, Tucker and Larson bought I.S.E. securities that resulted in illegal profits of roughly $1.1 million and $31,000, respectively.

During the scheme, Tucker bought 20,000 shares of I.S.E. common stock and more than 900 I.S.E. call option contracts. During the same period of time, Larson bought 1,700 shares of I.S.E. common stock.

I.S.E.'s share price jumped nearly 50 percent after the merger became public.

ISE provides an electronic trading platform for options on stocks of individual companies.

by Alfonso Serrano F.