U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23304 / July 15, 2015
Securities and Exchange Commission v. Timothy J. McGee, et al., Civil Action No. 12-cv-1296 (E.D. Pa.)
SEC Settles Civil Action Against Convicted Insider Trader
The Securities and Exchange Commission announced today that, on July 15, 2015, the Honorable Timothy J. Savage of the United States District Court for the Eastern District of Pennsylvania entered a Judgment Order against defendant Timothy J. McGee, a convicted insider trader.
The SEC's amended complaint alleged that co-defendants Timothy J. McGee and Michael W. Zirinsky are both former registered representatives at Ameriprise Financial Services, Inc., illegally traded in the stock of Philadelphia Consolidated Holding Corp. (PHLY) based on non-public information about the company's impending merger with Tokio Marine Holdings, Inc. The complaint alleged that McGee misappropriated the inside information from a PHLY senior executive who was confiding in him through their relationship at Alcoholics Anonymous about pressures he was confronting at work. McGee then purchased PHLY stock in advance of the merger announcement and tipped Michael W. Zirinsky, who also traded and tipped others.
McGee consented to the entry of a final judgment that permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, orders him to disgorge $292,128 in ill-gotten gains from the illegal insider trading, together with prejudgment interest in the amount of $70,576, for a total of $362,704. In April 2015, the court granted the SEC's motion for summary judgment against McGee, holding him liable for insider trading in PHLY stock and tipping his co-defendant Michael W. Zirinsky.
In May 2015, the Court entered a final consent judgment against McGee's co-defendant, Zirinsky, that permanently enjoined him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and ordered him to disgorge his ill-gotten gains from the illegal insider trading, pay prejudgment interest thereon and a civil penalty, for a total of $249,372. The SEC previously entered into consent judgments with two other defendants and five relief defendants with recoveries totaling over $1.8 million.
The court's entry of the Judgment Order against McGee resolves this litigation in its entirety.
In a separate criminal proceeding, on November 15, 2012, McGee was convicted of securities fraud based on his insider trading in PHLY stock and perjury for testifying falsely under oath before the Commission in its investigation of this matter. On July 2, 2013, the court sentenced McGee to a six-month term of imprisonment, two years of supervised release, and ordered him to pay a $100,000 fine and a $200 special assessment. On August 14, 2014, the U.S. Court of Appeals for the Third Circuit affirmed McGee's conviction. On February 23, 2015, the U.S. Supreme Court denied a petition by McGee for a writ of certiorari.