Lawyer Settles Insider-Trading Charges Over Defense Merger : Securities: Lockheed Martin employee admits no guilt but will pay $86,590, the SEC says.
A lawyer for the former Lockheed Corp. has settled insider-trading charges that he allegedly profited from advance knowledge of Lockheed’s recent $10-billion merger with Martin Marietta Corp., federal regulators said Wednesday.
The civil complaint against Stephen H. Wagner, 60, was filed in federal court in Los Angeles by the Securities and Exchange Commission. Wagner lives in the San Fernando Valley and still works for the merged Lockheed Martin Corp. at its Calabasas office, where Lockheed Corp. was headquartered, the SEC said.
At the time the complaint was filed, Wagner signed a consent decree in which he neither admitted nor denied the allegations but agreed to settle the charges and pay $86,590 in disgorged profits and penalties, the agency said.
The SEC said in its complaint that its “investigation is continuing,” but it did not elaborate.
Wagner was said to be out of his office Wednesday afternoon and could not be reached. His lawyer, James Sanders, did not return phone calls seeking comment.
Lockheed Martin spokesman Charles Manor said Wagner is still an employee but that the “company will now carefully evaluate Mr. Wagner’s case and take appropriate steps.” Manor also called the case “a regrettable incident.”
“Insider trading” refers to the illegal practice of buying or selling securities based on non-public information--in this case the plans of Lockheed and Martin to merge, which the companies publicly announced Aug. 29. The merger, which created the nation’s largest defense contractor, was completed last month.
Lockheed Martin is headquartered in Bethesda, Md.
The SEC alleged that shortly before the deal was announced, Wagner, a lawyer handling tax and international matters in Lockheed’s legal department, learned of the pending deal and bought 50 Lockheed call options.
The options gave their holder the right to buy Lockheed common stock at a certain price before a specified date, and they were essentially bets that Lockheed’s stock would rise within that period.
After Lockheed and Martin announced their merger plans, both Lockheed’s stock and the value of the Lockheed options soared, providing Wagner with a $42,188 paper profit, the SEC alleged.
Shortly after the announcement, the Pacific Stock Exchange, which trades Lockheed stock options, confirmed that it was reviewing trades of those options before the deal was announced and had turned over that data to the SEC.
The SEC declined to comment on whether the case against Wagner stemmed from the PSE’s study.
