Two individuals settled SEC charges for insider trading in a case concerning the merger of a medical device company (see here and here). A third individual, who was named as a relief defendant, also agreed to settle with the SEC.
According to the SEC Complaints filed in the U.S. District Court for the Western District of Oklahoma, John Kenneth Davidson learned of a possible merger between Covidien PLC and Medtronic PLC and traded on the information, realizing a gain $19,000. Davidson tipped off a friend, John Special, who purchased stocks and options in an account under a third friend's name, Michael Murphy. They realized $1.182 million and over $359,000, respectively.
To settle the charges:
- Mr. Davidson agreed to pay $19,212 in disgorgement, $3,822 in prejudgment interest, and a $19,212 civil penalty;
- Mr. Special agreed to pay approximately $3 million in financial relief: $1,182,472 in disgorgement, $231,782 in prejudgment interest, and a $1,542,242 civil penalty; and
- Mr. Murphy, who was named as a relief defendant only, agreed to disgorge $359,770.
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