An Insider Is Out Almost $400,000

Another inside trader has agreed to settle civil charges without admitting or denying allegation, the Securities and Exchange Commission announced today.

What makes this case unusual is that the accused didn't work for the company involved, wasn't related to anyone who did, and hadn't relied on a friend for the tip.

The trader, Matthew R. Zachowski, was a public-relations consultant whose firm, Intermarket Communications in New York, had been hired to advise on a merger.

The German derivatives exchange Eurex hired Intermarket in April 2007 to help with its plan to acquire the International Securities Exchange, the S.E.C. said in its complaint. At the time, Zachowskil, a co-founder, was C.E.O. on Intermarket.

The S.E.C. says Zachowski, as both chief executive and administrator of the firm's computer system, learned non-public information about the I.S.E. acquisition. A few days after Eurex hired his firm, Zachowski bought more that $450,000 worth of I.S.E. stock, according to the complaint.

After the deal was announced on the next business day, Zachowski immediately sold the stock for a risk-free 43 percent profit of $194,365.

Without admitting or denying the allegations, Zachowski agreed to pay almost $400,000. That includes the $194,365 profit as well as a $194,365 penalty and $6,531 in interest.

Neither Zachowski nor his lawyer could be reached for comment.

by Shannon Geis