MANHATTAN (CN) – A former Goldman Sachs banker is one of 11 people accused of inside trading in ahead of two corporate buyouts, the SEC said in four complaints filed in three states. Investigators conducted “surveillance of unusual trades” before the takeovers of Safeco and Neff Corps.
Five defendants illegally tipped or traded on confidential information before Liberty Mutual Insurance announced its deal to buy rival Safeco for $6.2 billion, the SEC said.
The six others are accused inside trading before the announcement that private-equity firm Odyssey Investment Partners would acquire Neff Corp., a Miami-based rental equipment company.
In the Safeco case, Goldman Sachs junior analyst Anthony Perez, 26, learned of the Safeco deal and tipped his brother Ian Perez, 23, telling him to not to buy large blocks to avoid detection, according to the complaint. The brothers allegedly netted a profit of more $150,000.
Math Hipp Jr. put the pieces together based on conversations with his wife, a secretary at Safeco, and by noticing changes in her work habits and hours that told him “something big” was about to happen with the company, according to the SEC. He concluded that Safeco “was poised to make a big announcement that would drive up the stock price at least 10 percent,” the lawsuit states.
Hipp Jr., 49, allegedly made $118,000 after the acquisition was announced.
Former Hartford Financial analyst Peter Talbot told his nephew Carl Binett that he heard Safeco was a target for takeover, the SEC said. Hartford Financial was also in the market acquire the Seattle-based insurance company. Talbot bought call options through a brokerage set up by Binett for a $615,000 profit, the SEC says
Anthony Perez agreed to pay a $25,000 fine; his brother agreed to disgorge $152,992.
Hipp Jr. settled by agreeing to pay $239,770. None admitted or denied the charges.
In 2005, Odyssey purchased Neff Corp. for $510 million. Miami lawyer Thomas Borell allegedly made nearly $1 million in illegal trades in the six weeks leading up to the takeover. He allegedly learned of the acquisition from a close friend and Neff executive, whose brother was Neff’s CEO. Borell, 48, bought most of his Neff stock while he and the director’s families were vacationing together, the complaint states. He allegedly called his broker more than 70 times on the trip and bought more than 177,000 shares.
Sebastian De La Maza learned of the deal from his daughter, the wife of Neff’s CEO, according to the SEC. He allegedly made $84,000. Two purported friends and business associates of the CEO also traded off confidential information for a $400,000 profit, the SEC said.
The Neff CEO has not been charged.
Two accountants in Kansas City, Mo., allegedly traded on inside information gathered while preparing Neff’s tax returns.
All six defendants in the Neff case have denied any wrongdoing.
“These individuals traded on confidential information with reckless disregard for the fairness of the markets and utter disrespect for their jobs or close-knit relationships,” said Robert Khuzami, director of the SEC’s Division of Enforcement. “But their greed left a trail for investigators to follow.”
The SEC filed the charges in Federal Courts in Miami, Orlando, Boston and Seattle.