Thursday, August 11, 2011

SEC Charges Former Baseball Player and Others with Insider Trading;

Lawyers, doctors, even scientists and now baseball players - it seems that no one can escape the allure of trading on inside information. It is truly an amazing phenomenon, since presumably all of these people know it is illegal. Given the draconian penalties, you would think they would not take the risk.

The SEC has charged former professional baseball player Doug DeCinces and three others with insider trading ahead of a company buyout. The SEC alleges that DeCinces and his associates made more than $1.7 million in illegal profits when Abbott Park, Ill.-based Abbott Laboratories Inc. announced its plan to purchase Advanced Medical Optics Inc. through a tender offer.

The SEC alleges that DeCinces, who lives in Laguna Beach, Calif., received confidential information about the acquisition from a source at Santa Ana, Calif.-based Advanced Medical Optics. DeCinces immediately began to purchase shares of Advanced Medical Optics in several brokerage accounts, buying more throughout the course of the impending transaction as he received updated information from his source. During this time, DeCinces also illegally tipped three associates who traded on the confidential information – physical therapist Joseph J. Donohue, real estate lawyer Fred Scott Jackson, and businessman Roger A. Wittenbach.

DeCinces agreed to pay $2.5 million to settle the SEC’s charges, and the three others also agreed to settlements.

“Time and again, we see reputable people engaging in insider trading and risking their good names in order to enrich themselves and those around them ...People need to understand that we are watching for suspicious trading activity, and they will pay a heavy price when we catch them insider trading.” Daniel M. Hawke, Chief of the SEC Division of Enforcement’s Market Abuse Unit and Director of the Philadelphia Regional Office.

The SEC Complaint is online, as is the Commission's press release

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