UPDATE: SEC Charges 3 Canadians In $1 Million Insider-Trading Scheme
June 10 2009 - 3:29PM
Dow Jones News
The U.S. Securities and Exchange Commission filed civil charges
Wednesday against three Canadians, including the spouse of an
administrative assistant in Merrill Lynch & Co.'s Canadian
unit, in an insider-trading scheme that allegedly generated more
than $1 million in ill-gotten gains.
The lawsuit, filed in U.S. District Court in Manhattan, alleges
Michael Goodman, 36 years old, of Thornhill, Ont., learned
information concerning proposed business combinations from
confidential conversations with his wife, who had learned of the
deals through her employment at Merrill Lynch Canada Inc. The wife
has since left Merrill Lynch.
"Goodman's wife expected that her husband would keep this
information confidential and believed that her husband understood
that the conversations concerning those companies were
confidential," the SEC said.
Goodman has settled with the SEC, agreeing to pay full
disgorgement. The SEC deferred his obligation to pay because of his
indigent status.
"Mr. Goodman cooperated with the commission's investigation,"
said John A. Freedman, Goodman's lawyer. "He is pleased to have
resolved this matter and to be able to move on with his life."
Goodman, who works at a scrap metal company, allegedly shared
the information with two business associates - Phillip Macdonald, a
self-employed attorney and friend of Goodman's, and Martin Gollan,
a scrap metal dealer, the SEC said.
Gollan, 63, and Macdonald, 48, both of North York, Ont., then
purchased securities in several companies involved in deals in
which Merrill acted as an adviser or provided fairness
opinions.
Phone calls to Macdonald and Gollan's homes weren't immediately
returned Wednesday.
The deals included Eastman Kodak Co.'s (EK) acquisition of Creo
Inc., Novartis AG's (NVS) merger with Eon Labs Inc., and GameStop
Corp.'s (GME) acquisition of Electronics Boutique Holdings Corp. in
2005.
Bill Halldin, a Merrill Lynch spokesman, said the company
"cooperated fully" with the SEC's investigation.
-By Chad Bray, Dow Jones Newswires; 212-227-2017;
chad.bray@dowjones.com