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A Little Friendly Insider Trading
A former partner with a Big Four accounting firm allegedly tipped his friend to at least seven potential acquisition targets. She, in turn, tipped her father and two others, according to an insider trading case filed in federal district court today.
All together, they made nearly $600,000 in illegal profits, the Securities and Exchange Commission said.
The S.E.C. charged James E. Gansman, a former partner at Ernst & Young LLP, with telling a friend, Donna B. Murdoch, about the identities of companies that had sought valuation services from the accounting firm.
Mr. Gansman, 48, of Manhattan, worked in the transaction advisory services department, which advised clients such as Freescale Semiconductor Inc., whose stock was allegedly illegally traded.
According to the S.E.C.'s complaint, Murdoch, a managing director of a Pennsylvania-based broker dealer, used the information to trade in securities in the target companies and to tip her father, Gerald L. Brodsky, who also traded, as well as two others who traded.
The others are unnamed; the S.E.C. said the investigation is ongoing.
Murdoch, 46, lives in Malvern, Pennsylvania. Her father, 71, is from nearby Narberth. Calls to the lawyers for each defendant were not returned.
Linda Chatman Thomsen, the director of the S.E.C.'s enforcement division, said the case "underscores how important it is for deal advisers and due diligence providers retained by acquirers and their targets to respect the confidentiality of the information shared with them."
According to the complaint, Murdoch garnered $392,035 in illegal profits after using the non-public information to trade in the companies. Brodsky made $63,400 after she told him about the pending acquisition of Freescale. The complaint also said that Murdoch recommended trading in Freescale and ATI Technologies to two others, who traded for $140,760 in profits.
Other companies where stock was unlawfully traded on the basis of Gansman's information included Portal Player, Inc., Spectralink Corp. and K2 Inc., the S.E.C. charged.
All told, the group made $596,000 - which the S.E.C. said they must give up, as well as pay prejudgment interest, civil money penalties and be enjoined against future violations of securities laws.
by Elizabeth Olson
