SEC Suit Accuses 4 of Insider Trading
U.S. regulators on Tuesday accused four people of insider trading violations in connection with Citigroup Inc.'s $4.9-billion purchase of Golden State Bancorp Inc. in 2002.
The Securities and Exchange Commission alleged that Mark Kelly of Dallas, chief financial officer of Auto One Finance -- a unit of Golden State -- knew about the merger ahead of time because he was helping to prepare for it.
Kelly, 35, tipped off his friends Martin Angel, 40, of Dallas and Chad Latvaaho, 35, of Monticello, Minn., the SEC alleged. Angel in turn told his colleague John Buck, 42, of Dallas, the SEC said in a civil lawsuit.
San Francisco-based Golden State was the second-largest U.S. thrift at the time of the merger, which aimed to almost double the number of Citigroup’s U.S. branches. When the deal was announced in May 2002, Golden State’s stock price rose nearly 9%.
Angel, Latvaaho and Buck made a total of almost $250,000 in illegal trading profits, the SEC said. They had purchased shares and call options on the stock, the suit said.
“People who trade on confidential information cheat ordinary investors who don’t have access to the secret information,” Helane L. Morrison, chief of the SEC’s San Francisco office, said in a statement.
Latvaaho, who did repossession work for Auto One, has agreed to settle the SEC’s allegations, the agency said.
Lawyers for the other three men either declined to comment or did not return calls for comment.