|
 The case against Christopher Saridakis, 45, is also notable because
it marks the first time the U.S. Securities and Exchange Commission
reached a so-called "non-prosecution" agreement with an individual,
an unnamed trader who it said provided "early, extraordinary and
unconditional" cooperation.
Federal prosecutors in Philadelphia charged Saridakis, who led the
marketing solutions division of GSI Commerce Inc, in a so-called
criminal information with securities fraud for leaking material
nonpublic information in March 2011 about eBay's plan to buy his
company.
Investigators said the resident of Greenville, Delaware, encouraged
two relatives and two friends to trade on his tips, leading to more
than $300,000 of illegal profits.
GSI shares rose nearly 51 percent on March 28, 2011, after eBay, the
online retailer, announced its $1.96 billion purchase of the King of
Prussia, Pennsylvania-based company.
The SEC said Saridakis agreed to pay $664,822 and accept an officer
and director ban to settle its charges. The cooperating defendant
and five other people agreed to pay more than $490,000 to settle
related SEC charges. Three of these defendants got lessened
penalties because they cooperated with the regulator.
COOPERATION YIELDS BENEFITS
The U.S. Department of Justice has long used deferred prosecution
and non-prosecution agreements to encourage and reward cooperation
in criminal investigations, and the SEC in January 2010 said it
would also use them in its civil probes.
"Although Saridakis' tips spun a web of illegal trading, some of the
downstream tippees substantially assisted in our investigation while
others hindered it," Andrew Ceresney, head of the SEC's enforcement
division, said in a statement.
"The reduction in penalties for those tippees who assisted us,
together with the non-prosecution agreement for one of the traders,
demonstrate the benefits of cooperating with our investigations," he
added. "The increased penalties for others highlight the risks of
impeding our work."
Saridakis could face up to 20 years in prison and a $5 million fine
if convicted in the criminal case, prosecutors said.
Richard Zack, a partner at Pepper Hamilton representing Saridakis,
said: "Chris accepts full responsibility for his conduct in this
matter, and has done everything he can to make the situation right.
He will continue to do so. He deeply regrets the effect of his
mistake on his family and friends."
[to top of second column] |
"IT'S CHEAP"
According to the SEC, Saridakis tipped his friends Jules Gardner, a
retired marketing executive, and Suken Shah, a doctor, about the
eBay acquisition.
It said Shah then passed the tip to his brother and fellow doctor
Shimul Shah, who in turn tipped the individual who entered the
non-prosecution agreement.
According to the SEC, Saridakis and Gardner exchanged 23 text
messages about the takeover on the night of March 20, 2011, eight
days before the transaction was announced.
"Do you own our shares?" Saridakis allegedly messaged.
"No, but it's cheap," Gardner responded.
"You should ... Soon."
"Tomorrow AM under $20."
"Exacly."
The other settling traders were Oded Gabay, a hairdresser who
learned of the proposed acquisition from a different source, and
Aharon Yehuda, who operated a diamond business and had been tipped
by Gabay, the SEC said.
Gardner lives in Villanova, Pennsylvania; Suken Shah in Wilmington,
Delaware; Shimul Shah in Cincinnati; and Gabay and Yehuda in New
York, the SEC said. Gardner and Gabay received lessened penalties
because they cooperated, it added.
Mark Jay Krum, a partner at Diamond McCarthy who is representing
Gardner, said his client is cooperating in an ongoing investigation
with the U.S. government.
Lawyers for the remaining defendants did not immediately respond to
emails seeking comment.
(Reporting by Jonathan Stempel in New York and Sarah N. Lynch in
Washington, D.C.; editing by Phil Berlowitz)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
