Two Ameriprise advisers traded on info gleaned from AA meeting: SEC

The SEC claims two Ameriprise advisers made a killing by trading on inside information about an upcoming merger. Where did they come across the info? At an Alcoholics Anonymous meeting, says the commission.
MAR 20, 2012
A pair of Ameriprise Financial Inc. investment advisers and three of their friends and family members 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 through 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 exec allegedly confided in Mr. McGee about pressures at work during the negotiations and 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. Shares of Philadelphia Consolidated Holding Corp. rose 64% when the company's merger with Tokio Marine Holdings was announced on 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 living 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 says it is an advisory practice of Ameriprise Financial Services Inc. An Ameriprise spokesman said today that both the advisers have now been suspended. “We fully cooperated with the SEC on this matter and conducted an internal review,” said Paul Johnson, spokesman for Minneapolis-based 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, were not immediately returned.

Latest News

'Bogged down' advisors just want to have fun (again)
'Bogged down' advisors just want to have fun (again)

Jim Cahn, of Wealth Enhancement Group, lifts the lid on his firm's partnership model, his views on RIA M&A, and the widely slept-on reason why advisors are merging into larger organizations.

Vestwell unveils new emergency savings account offering
Vestwell unveils new emergency savings account offering

The fintech firm is cementing its status in the workplace savings space with its latest ESA offering, which employers can integrate into their existing benefits package.

'Money Mimosas' and other ways to show your Valentine financial love
'Money Mimosas' and other ways to show your Valentine financial love

Wealth managers offer unique ideas for couples to grow closer emotionally and financially.

Limra research finds financial confidence on the rise among Black American workers
Limra research finds financial confidence on the rise among Black American workers

Survey findings suggest increased sense of financial security and more optimistic 2025 outlook, while highlighting employers' role in ensuring retirement readiness.

DOGE efforts sideswipe muni bonds backed by federal lease payments
DOGE efforts sideswipe muni bonds backed by federal lease payments

Falling prices for some securities within the $4 trillion state and local government debt market spotlight how the push to shrink spending is sending shockwaves across the US.

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.