Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, January 13, 2011

SEC and Canadian Attorney Settle Insider Trading Charges

On Jaunuary 11, 2011, the U.S. District Court for the Southern District of New York entered a settled Final Judgment as to Canadian attorney Phillip Macdonald.  The SEC charged that Macdonald engaged in insider trading in the securities of certain companies ahead of public announcements of business combinations. The Complaint alleges that between January and June 2005, the wife of Macdonald's co-defendant, Michael Goodman, learned the identities of those companies in the course of her employment as an administrative assistant with Merrill Lynch Canada, Inc. Goodman's wife sometimes mentioned the information to Goodman, expecting that he would keep it confidential. Goodman instead misappropriated the information by, among other things, recommending stocks to his business associate, Macdonald. On the basis of the information, Macdonald then purchased securities ahead of business combination announcements. (Goodman and Gollan previously consented to the entry of Final Judgments against them in the Commission's action.)

Macdonald consented to the entry of the Final Judgment against him, without admitting or denying the allegations in the Commission's Complaint, except as to jurisdiction. The Final Judgment against Macdonald permanently enjoins him from further violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b 5 and 14e-3 thereunder and orders him to pay disgorgement of $810,000.

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