Tuesday, January 8, 2008
On Nov. 26, 2007, the federal district court for the Northern District of Illinois entered a permanent injunction and other relief against Mark Michel, a registered representative with Wachovia Securities, finding that he repeatedly traded on material, non-public information in the securities of Blue Rhino Corp. (Blue Rhino) in the week leading up to Blue Rhino's Feb. 9, 2004, merger announcement with Ferrellgas Partners, LP. The Court found that a long-time friend of Michel's (who was a co-defendant in the case who had previously settled) tipped Michel about Blue Rhino's merger negotiations in a telephone call. The Court found that the following morning, Michel began a six-day buying spree for himself, his relatives and his customers in which he bought $1.4 million of Blue Rhino stock. The opinion also found that several other individuals had received the same information as Michel on the night of January 29 or shortly thereafter, all of whom were friends or relatives of a business partner of one of Blue Rhino's directors, and all made unusually large and unexplained purchases of Blue Rhino in the week before the merger. The judge found that based on the close relationships among the individuals involved, a series of unusual telephone calls on January 29 and 30, the unusually large purchases of Blue Rhino that followed almost immediately, and numerous "shifting, contradictory and implausible or inadequate explanations" of the purchases, Michel and the other individuals had engaged in insider trading.