Thursday, October 18, 2007

Baseball and Inside Information

Nothing goes better with the great American pastime than passing a little inside information to your friend about a pending corporate transaction.  The SEC filed a settled civil enforcement action against a former director of of NSD Bancorp who disclosed a pending merger of the company with F.N.B. Corp. that was announced in October 2004.  The tippee bought 2,000 shares, and after the announcement NSD's stock price jumped 52%, allowing him to reap over $25,000 in profits.  According to the SEC Litigation Release (here), the director provided the information at or before the September 22 Pittsburgh Pirates game.  According to Baseball-Reference.Com (here), the Pirates lost to the Chicago Cubs 1-0 that evening -- the type of pitcher's duel that has a lot of down time to discuss a proposed buyout, no doubt.  The SEC alleges that "the morning of September 23, 2004, Pitterich, who had no prior history of trading in the securities of NSD Bancorp, purchased 1,000 shares of NSD Bancorp's stock on the basis of the material, nonpublic information provided to him by Lenzner. On October 1, 2004, Pitterich, on the basis of the same information, purchased an additional 1,000 shares."  The tippee disgorged his profits plus payed a one-time penalty, and the director/tipper also payed a one-time penalty.  Given that the Bucs haven't had a winning season since 1992, when Barry Bonds was on the team -- with a much smaller head -- there's got to be some reason to attend a late-season game. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2007/10/baseball-beer-a.html

Civil Enforcement, Insider Trading, Securities, Settlement | Permalink

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