New York Couple Settle Insider-Trading Claims

(CN) — The Securities and Exchange Commission said a New York couple has agreed to pay civil penalties to settle claims they were involved in inside trading of a home-security company's stock.

Colin Whelehan, 26, and Sheren Tsai, 27, are accused of violating the Securities Exchange Act by trading shares of ADT Corp. stock on tips of inside information that Tsai got from Whelehan, her boyfriend.

In a complaint filed Thursday in Southern New York federal court, the SEC claims Whelehan, who worked at an investment firm, told his "live-in girlfriend and romantic partner" Tsai that home-security company ADT was going to be bought by Apollo Global Management affiliates.

Tsai then allegedly bought 1,500 shares of ADT stock on Jan. 22, 2016, and convinced a family member the same day to also buy ADT shares. Whelehan did not buy ADT stock.

Less than a month later, ADT stock went up 48 percent on news of the acquisition. Tsai made $19,000 and her relative made more than $4,000, the SEC alleges.

"When Whelehan tipped Tsai, Tsai knew that the information he communicated to her about the ADT acquisition had been obtained improperly, in breach of Whelehan's duty to his employer, and that Wheiehan conveyed this information to her as a gift, intending that she profit by purchasing ADT securities before the announcement," the SEC's complaint states.

Tsai and Whelehan agreed to settle the claims without admitting or denying the SEC's allegations. They'll each pay $23,914 in civil penalties, and Tsai will pay an additional $23,914 as disgorgement of illicit profits.

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