Ex-Planner for GE Settles SEC Charges of Insider Trading
A former General Electric financial planner was accused Monday by the Securities and Exchange Commission of illegally profiting from inside information about General Electric’s 1985 acquisition of RCA.
Thomas M. Hartnett, 37, now an assistant controller for planning and analysis at Union Pacific, settled the charges by agreeing to give up $8,472 that the SEC claims he illicitly made from advance word of the merger. In addition, he will pay a fine of the same amount. He also signed a consent agreement, which is neither an admission nor a denial of guilt.
Hartnett is the fifth person to be accused of illegally profiting from the GE acquisition of RCA. A month ago, the agency barred a former Lazard Freres & Co. junior analyst from the securities industry for allegedly tipping his father of the impending merger, which the Lazard firm was handling for RCA. The alleged scheme--which the SEC said also involved the analyst’s grandfather and a stockbroker--led to a record $2.3 million in fines.
Declines to Comment
The Hartnett case is apparently not connected to the earlier GE-RCA disclosure.
Hartnett, reached Monday at his office in New York, declined to comment on SEC allegations that he parlayed a $1,805 investment in RCA option contracts into $10,277 by illegally trading on information that he received from a subordinate five days before the merger was announced.
General Electric, which is cooperating with the SEC in its investigation of the deal, said Hartnett had no official role in the merger talks. In fact, he had been asked by GE last fall--several weeks before the discussions with RCA began Nov. 6--to devote his work hours to seeking employment elsewhere, according to GE spokesman John T. Batty. Hartnett resigned in March. Neither Batty nor Hartnett would say why the 14-year GE employee was asked to leave the company.
The SEC’s account of the case, filed in U.S. District Court here, is that an unnamed Hartnett subordinate who was working on the merger told Hartnett of the proposed deal last Dec. 6. That same day, the SEC alleges, Hartnett placed an order for 10 RCA call option contracts.
Hartnett sold those options the day after the merger was publicly announced, realizing what the SEC says was a profit of $8,472.
Hartnett joined General Electric’s financial management program after graduating from Dartmouth College in 1971. He held a variety of financial positions with the parent company and various subsidiaries before being named manager of financial planning and analysis in 1984.
