June 11, 2009 - 3:11am
U.S. Securities and Exchange Commission sued three Ontario residents for allegedly reaping $1.02 million (C$1.13 million) of illegal trading profits by using inside information on transactions involving Merrill Lynch & Co clients.
According to the SEC two defendants, Phillip Macdonald and Martin Gollan, were investing in securities of companies that were the targets of mergers and acquisitions, based on tips from the third defendant, Michael Goodman.
Goodman has settled without admitting wrongdoing, and will not pay a civil penalty, said the SEC. As reported in the filing in Manhattan federal court Goodman learned about possible transactions from his wife, who worked between January and June 2005 as an assistant to managing directors at Merrill Lynch Canada Inc in Toronto.
"Goodman and his wife sometimes discussed what was happening at her job," the SEC said. "Goodman's wife expected that her husband would keep this information confidential."
But 36-year-old Goodman, a scrap metal worker who lives in Thornhill, failed to keep the information in secret and instead gave tips to his friend Macdonald, 48, a lawyer and North York resident, and Gollan, 63, a scrap metal dealer also from North York.
According to the SEC claims through their trading, Macdonald obtained more than $900,000 of gains and Gollan got more than $90,000. Thus the regulators seek damages in the form of their gains plus $251,000 of interest, civil fines and other remedies.
Meantime, John Freedman, a partner at Arnold & Porter LLP in Washington, D.C. who represents Goodman, said his client cooperated with the SEC and was pleased to resolve the matter.
The SEC said the illegal transactions involved eight target companies, including Burnaby, British Columbia printer software maker Creo Inc, which was bought by Eastman Kodak Co (EK.N), and Mississauga, Ontario building products company Masonite International Corp, which went private.
The other companies were Commercial Federal Corp, Eon Labs Inc, Electronics Boutique Holdings Corp, Great Lakes Chemical Corp, Performance Food Group Co and Shopko Stores Inc, the SEC said.
According to the SEC two defendants, Phillip Macdonald and Martin Gollan, were investing in securities of companies that were the targets of mergers and acquisitions, based on tips from the third defendant, Michael Goodman.
Goodman has settled without admitting wrongdoing, and will not pay a civil penalty, said the SEC. As reported in the filing in Manhattan federal court Goodman learned about possible transactions from his wife, who worked between January and June 2005 as an assistant to managing directors at Merrill Lynch Canada Inc in Toronto.
"Goodman and his wife sometimes discussed what was happening at her job," the SEC said. "Goodman's wife expected that her husband would keep this information confidential."
But 36-year-old Goodman, a scrap metal worker who lives in Thornhill, failed to keep the information in secret and instead gave tips to his friend Macdonald, 48, a lawyer and North York resident, and Gollan, 63, a scrap metal dealer also from North York.
According to the SEC claims through their trading, Macdonald obtained more than $900,000 of gains and Gollan got more than $90,000. Thus the regulators seek damages in the form of their gains plus $251,000 of interest, civil fines and other remedies.
Meantime, John Freedman, a partner at Arnold & Porter LLP in Washington, D.C. who represents Goodman, said his client cooperated with the SEC and was pleased to resolve the matter.
The SEC said the illegal transactions involved eight target companies, including Burnaby, British Columbia printer software maker Creo Inc, which was bought by Eastman Kodak Co (EK.N), and Mississauga, Ontario building products company Masonite International Corp, which went private.
The other companies were Commercial Federal Corp, Eon Labs Inc, Electronics Boutique Holdings Corp, Great Lakes Chemical Corp, Performance Food Group Co and Shopko Stores Inc, the SEC said.