Insider trading: Money manager used Alcoholics Anonymous friend for stock information, SEC says
Occupy Los Angeles protesters rally with the Move Your Money March through the downtown financial district in the on what is being called Bank Transfer Day, on November 5, 2011 in Los Angeles, California.
During Alcoholics Anonymous meetings, it may have seemed like former investment banker Timothy J. McGee was just a really good listener.
Now, McGee is charged with using a friend's confidential Alcoholics Anonymous confessions for financial gain.
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McGee befriended an investment banker at the meetings. The two had known each other for almost a decade, the Wall Street Journal reported. They bonded over their successful business careers and their love of triathlons, the New York Times reported. The insurance executive then confided in McGee the root of his drinking problem: he was under pressure to sell his company, Philadelphia Consolidated, to Tokio Marine.
As a result of the tip, McGee then purchased Philadelphia Consolidated stock in advance of the merger and made a $292,128 profit, the Wall Street Journal reported.
McGee then leaked the deal to others, the Securities and Exchange Commission alleged in a civil suit. The SEC has charged five people with earning a $1.8 million profit from insider trading as a result of the A.A. confessions, the Associated Press reported.
McGee “stole information shared with him in the utmost confidence," an SEC official told the Times. The insurance executive has not been named or charged in the SEC complaint.
“The confidentiality of information shared between members of the A.A. program is underscored at each meeting, where participants are reminded that ‘what is discussed here stays here,’ ” the SEC complaint says.