The SEC cracked down on John McEnery III, his son, John McEnery IV, and Michael Rawitser for allegedly committing insider trading in relation to GE's ($GE) acquisition of cancer diagnostic and laboratory services company Clarient in October 2010.
The agency accused McEnery III of breaching a duty of trust and confidence by trading on a friend's word that Clarient was going to be acquired. The friend worked at one of the companies.
McEnery III apparently told his son about the deal, as well as longtime friend Michael Rawitser. The three of them earned more them $50,000 when Clarient's stock price rose by 33% following the public announcement of GE's impending acquisition, the SEC says.
The trio did not admit to or deny the allegations, but agreed to pay about $170,000 in total to settle the charges filed in federal court in San Jose, CA. The settlement must still be approved by the court.
The SEC says it appreciates the assistance provided by the non-profit Financial Industry Regulatory Authority.
"Individuals who obtain confidential information through a relationship of trust with a corporate insider are prohibited from using that information to trade securities," said Joseph Sansone, acting co-chief of the SEC's Market Abuse Unit, in a statement. "These traders violated such a trust by using highly-sensitive information to reap illicit trading profits."
The crackdown comes on the heels of a suit against a much larger and better organized insider trading and hacking ring that allegedly generated more than $100 million in insider trading profits, including more than $3.6 million from early access to an Edwards Lifesciences ($EW) news release, and more than $2.5 million from early access to an Align Technology news release.
- read the release