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Monday, May 27, 2024 | Back issues
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SEC Doles Out Inside-Trading Fines

PHILADELPHIA (CN) - An e-commerce company executive tipped friends that eBay was buying his company, and they made more than $300,000 from illegal inside trading on the dope, the SEC claims in court.

The SEC sued Christopher Saridakis and the man he allegedly tipped, Jules Gardner, in Federal Court.

Saridakis was CEO of a marketing division of GSI Commerce, which is not a party to the complaint.

"Saridakis tipped Gardner and another friend, Suken Shah ('Shah'), in addition to certain family members about the acquisition of GSIC. On the day of the announcement, the closing price of GSIC stock increased more than 50 percent," the SEC says in the lawsuit.

Gardner bought 25,000 shares of GSIC based on the top, and made more than $250,000 from it, the SEC says in the lawsuit. Gardner in turn tipped two more friends, who also profited, the SEC said.

Shah, another friend of Saridakis, allegedly waited till the day of the public announcement to buy 1,000 shares, and made only $9,838 from the inside trading, the SEC claims. It claims that Saridakis's family members made another $41,060 from the inside tip.

Saridakis agreed to pay $664,822, or twice his tippees' profits, the SEC said in a statement announcing the settlement.

"The five traders and the individual who entered into a non-prosecution agreement will pay a combined total of more than $490,000 in their settlements, which range from disgorgement-only or reduced penalties for cooperators to penalties of two or three times the trading profits for other traders," according to the SEC statement.

All these shenanigans happened in March 2011.

Some of the "downstream tippees" helped the SEC in its investigation, and got lighter penalties, while others hindered it, the SEC said in the statement.

Shah, a Wilmington, Del. doctor, must disgorge and pay fines totaling $76,418, the SEC said - treble damages.

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