CHICAGO (CN) – A Georgia-Pacific board member tipped his brother that Georgia-Pacific was about to be bought by Koch Industries, and the brother and three cronies profited by illegally trading on the inside information, the SEC claims in Federal Court. The GP board member, an attorney, was formerly general counsel for AT&T, and then CEO of AT&T Wireless, the SEC says; both brothers are attorneys.
According to the SEC complaint:
James D. Zeglis got inside information from his brother on Nov. 10, 2005, three days before the public announcement. Zeglis then tipped off Gautam Gupta and Jim W. Dixon, both of whom traded on the info. Gupta in turn tipped Lance D. McKee, who also traded on it. Dixon allegedly paid Zeglis a kickback for the tip.
As expected, Georgia-Pacific stock rose on the public announcement, by 36%. Gupta, who spent more than $1 million on GP stock in his 3-day buying spree, made $689,401 on the stock. Dixon made $123,158 from GP stock and options. Dixon kicked back $25,000 of his ill-gotten gains to Gupta.
Zeglis, 52, is an attorney. Zeglis’ brother, also an attorney, was a member of GP’s board of directors and formerly was general counsel for AT&T, then became CEO of AT&T Wireless, and remained so until it was bought by Cingular Wireless in 2004, according to the complaint.
Gupta, 53, is a doctor who owns and operates five weight-loss clinics.
Dixon, 61, is a real estate developer.
McKee, 44, is a “self-described ‘self-employed investor,'” and formerly was a licensed securities broker and dealer.