Friday, May 11, 2007
Married couples need to have at least some common interests, and engaging in joint projects can certainly strengthen a relationship. When the venture involves trading on insider information one partner gets on the job and passes on to the other, however, then the prospect of a jail sentence and SEC enforcement action might not be a salve for the relationship. Three insider trading cases this week involve trading by married couples, which should set some kind of record. First, Jennifer Wang and her husband Ruben Chen were charged with one count of conspiracy and three counts of insider trading for transactions in on-line brokerage accounts in the name of Wang's mother (Feng) that netted over $600,000 in profits, and the SEC also filed a civil enforcement action. Wang was a vice president at Morgan Stanley, and the trading involved (1) Morgan Stanley Real Estate's (MSRE) December 19, 2005 announcement of its acquisition of Town & Country Trust; (2) MSRE's August 21, 2006 announcement of its acquisition of Glenborough Realty Trust; and, (3) Formation Capital, LLC and JER Partners' January 16, 2007 announcement of its agreement to acquire Genesis HealthCare Corporation. Chen was an analyst at international banking firm ING Group, and the SEC Litigation Release (here) discusses how the trading occurred:
The Commission's complaint alleges that Chen and Wang funded and exercised control over Feng's online brokerage accounts. When Feng's first brokerage account was opened, it was funded with money from a checking account in Wang and Chen's name. In addition, Feng, who lives in Beijing, China, did not access the two online brokerage accounts that were opened in her name on the days of the relevant trading. Rather, most of the logins to the brokerage accounts were from Internet Protocol addresses at ING and from Chen and Wang's home in New Jersey.
A press release issued by the U.S. Attorney's Office for the Southern District of New York (here) discusses the arrest of Wang and Chen and the charges.
The second case involves the guilty pleas of Randi and Christopher Collatta to conspiracy and insider trading charges involving tipping and trading before the announcement of four deals. Sticking with the marriage and Morgan Stanley theme, Randi was an attorney in the investment firm's compliance office, the office whose responsibilities include monitoring and preventing insider trading. Both Collattas are attorneys, although not for too much longer with their guilty pleas. Three other defendants have pleaded guilty, according to a press release issued by the U.S. Attorney's Office (here).
Finally, On May 8, the SEC filed insider trading charges against Kan King Wong and Charlotte Ka On Wong Leung, a married couple in Hong Kong, alleging that they purchased 415,000 shares of Dow Jones stock in April in advance of the announcement of News Corp.'s offer of $60 per share to buy the company. The transactions netted them over $8 million in profits, and the SEC obtained an order freezing the money at Merrill Lynch where they conducted the trades (SEC Litigation Release here).
Maybe bowling, or tennis, or even just long walks would be a better way to strengthen the relationship, rather than insider trading. (ph)