Insider trading charged in Liberty Mutual-SAFECO dealPosted On: Jul. 16, 2009 12:00 AM CST
SEATTLEThe U.S. Securities and Exchange Commission Thursday accused five individuals in separate insider trading schemes regarding last year’s Liberty Mutual Insurance Co. merger with SAFECO Corp.
According to documents filed in federal court in Seattle, Math J. Hipp Jr. used information gained from his wife, who was executive assistant to SAFECO’s executive vp of insurance operations, to buy SAFECO call options six days before the insurance companies announced their merger on April 23, 2008.
According to the SEC’s complaint, Mr. Hipp bought 127 SAFECO call options between April 15 and 17, 2008, and later sold the options for a $118,245 profit.
Though Mr. Hipp’s wife signed a confidentiality agreement with SAFECO not to discuss the potential deal, Mr. Hipp gained enough information through her work habits and conversations to realize “something big” was about to happen with SAFECO, according to the SEC complaint.
According to court files, Mr. Hipp concluded SAFECO “was poised to make a big announcement that would drive up the stock price at least 10%.”
Mr. Hipp has already agreed to pay $239,770 to settle the SEC charges against him without admitting or denying the allegations. His wife was not charged.
Also charged is Anthony Perez, who tipped his brother, Ian C. Perez, using nonpublic information obtained through his job with Goldman Sachs & Co. while working on a the potential acquisition of SAFECO for a client, according to the SEC.
The SEC also accused Peter E. Talbot, a former financial analyst at a subsidiary of Hartford Financial Services Group, of tipping his nephew, Carl E. Binette, after learning that SAFECO was an acquisition target.
Ian Perez made a profit of $152,000 and Messrs. Talbot and Binette each made a profit of $615,000 after selling back call options after the merger was announced, the SEC said.
The Perez brothers agreed to settle their charges without admitting or denying guilt. Anthony Perez will pay a $25,000 penalty, while Ian Perez agreed to pay disgorgement and prejudgment interest totaling $152,992.
No information was available about the status of charges against Messrs. Talbot and Binette.