SEC: Ameriprise advisers traded on info confided in AA
A pair of Ameriprise Financial Inc. investment advisers and three friends and relatives allegedly earned more than $1.8…
A pair of Ameriprise Financial Inc. investment advisers and three friends and relatives allegedly earned more than $1.8 million in illicit profits through trades based on inside information that an insurance company was planning to merge with a Japanese firm.
Adviser Timothy McGee learned of the deal as a result of a personal relationship he had formed through Alcoholics Anonymous with an executive of Philadelphia Consolidated Holding Corp., the Securities and Exchange Commission said. The insurance company executive allegedly confided in Mr. McGee about pressures at work during the negotiations. Mr. McGee promised to keep the information confidential.
In addition to buying shares in the insurance company himself, Mr. McGee tipped off adviser Michael Zirinsky, with whom he shared office space at the time, the SEC said in its complaint, filed in U.S. District Court for the Eastern District of Pennsylvania in Philadelphia.
Mr. Zirinsky allegedly bought shares for his own account and those of his wife, sister, mother and grandmother. He also alerted his father and a friend living in Hong Kong, both of whom also bought shares in advance of the merger announcement, the SEC said.
THEY “KNEW BETTER’
Shares of Philadelphia Consolidated Holding Corp. rose 64% when the company's merger with Tokio Marine Holdings was announced July 23, 2008.
“McGee stole information shared with him in the utmost confidence, and as securities industry professionals, he and Zirinsky clearly knew better,” said Elaine Greenberg, associate director of the SEC's regional office in Philadelphia. “As this case demonstrates, we will follow each link in a tipping chain all the way to Hong Kong if necessary.”
Mr. Zirinsky's friend and a woman in Hong Kong who was tipped by the friend, agreed to pay $1.3 million to settle the SEC allegations against them. They settled without admitting or denying the charges.
The two advisers, both of whom live near Philadelphia, have practiced together since 2009 through the firm Frazer, McGee, Wayman, Zirinsky & Associates in Plymouth Meeting, Pa., according to the SEC. The firm is an advisory practice of Ameriprise Financial Services Inc.
An Ameriprise spokesman said last week that both the advisers have been suspended.
“We fully cooperated with the SEC on this matter and conducted an internal review,” said Paul Johnson, a spokesman for Ameriprise, which has about 10,000 financial advisers. “We have strict rules related to the use of material, non-public information.”
Calls to Mr. McGee's attorney, John Grugan at Ballard Spahr LLP, and Mr. Zirinsky's lawyer, Richard Levan of Wiggin and Dana LLP, weren't returned.
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