U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23408 / November 17, 2015
Securities and Exchange Commission v. Steven C. Watson, Civil Action No. 1:15-cv-13868
SEC Charges Man with Insider Trading On Acquisition of Cooper Tire
The Securities and Exchange Commission today charged a Lynnefield, Massachusetts man who illegally profited from insider trading on news of a proposed acquisition of Cooper Tire and Rubber Company by Apollo Tyres Ltd.
Earlier this year, the SEC charged two long-time friends, Amit Kanodia and Iftikar Ahmed, with insider trading and alleged that another close friend of Kanodia also profited by trading on the confidential information provided by Kanodia. In a separate complaint filed today, the SEC now files fraud charges against Steven C. Watson, another close friend of Kanodia.
In its complaint, the SEC alleges that by April 2013, India-based Apollo Tyres was engaged in serious negotiations to acquire Cooper Tire, of Findlay, Ohio. Although the acquisition was never completed, the complaint alleges that Cooper Tire’s stock price jumped 41 percent when the acquisition was announced in June 2013. The SEC alleges that Kanodia learned of the deal from his wife (then the general counsel of Apollo) and tipped the news to Watson prior to the acquisition announcement.
According to the SEC’s complaint, Watson bought Cooper Tire stock and options based on Kanodia’s tip. After the deal was public, Watson allegedly liquidated his Cooper Tire holdings for a total profit of nearly $170,000. Consistent with an agreement between the two friends, Watson allegedly paid Kanodia more than $22,000, which represented a percentage of his profits.
Watson has consented to the entry of an injunction from violations of Section 10(b) of the Securities Exchange Act of 1933 and Rule 10b-5 thereunder and to pay disgorgement and a civil penalty to be determined at a later date. In consenting to the judgment, Watson admitted certain facts, including that he traded based on material nonpublic information he received from Kanodia, and acknowledged that his conduct violated the federal securities laws. On September 11, 2015, Watson pled guilty to criminal charges brought by the U.S. Attorney’s Office for the District of Massachusetts stemming from the same conduct.
The SEC’s investigation has been conducted by Jay A. Scoggins and Jeffrey E. Oraker of the SEC Division of Enforcement’s Market Abuse Unit in the Denver Regional Office with assistance from Patrick A. McCluskey of the Market Abuse Unit in the Philadelphia Regional Office. The case has been supervised by Joseph G. Sansone, Co-Chief of the Market Abuse Unit, and the litigation will be led by Nicholas P. Heinke and Mark L. Williams of the Denver Regional Office. The SEC appreciates the assistance of the U.S. Attorney’s Office in Boston, the Federal Bureau of Investigations, and the Financial Industry Regulatory Authority.
For further information, see Press Release No. 2015-56 (April 2, 2015).