The SEC charged Doug DeCinces, former third baseman for the Orioles, Angels and Cardinals - along with 3 others - with insider trading ahead of a company buyout.  The four made over $1.7 million in illegal profits when Abbott Labs announced its plan to purchase Advanced Medical Optics through a tender offer.

Allegations in SEC Complaint.   After receiving confidential information about the acquisition from a source at Santa Ana, CA-based Advanced Medical Optics, DeCinces - who lives in Laguna Beach, CA - immediately began purchasing shares of Advanced Medical Optics in several brokerage accounts.  He continued to do so as he received updated information from his source. 

Eventually, DeCinces purchased at least 83,700 shares.  The SEC alleged that DeCinces knew what he was doing - and that his source was legally obligated to keep the information confidential.  Some of the accounts that DeCinces used to buy the shares were in his grandchildren’s names.  On at least one occasion, DeCinces funded his purchase of shares by liquidating a diverse portfolio of 110 stocks.  When a public announcement was made by the companies on 1/12/09, the stock price for Advanced Medical Optics jumped 143%, at which point he sold all of his shares for nearly $1.3 million in profits.

Between the time he received the information and the public announcement, DeCinces illegally tipped 3 associates who traded on the information, as well - physical therapist Joseph Donohue, real estate lawyer Fred Jackson, businessman Roger Wittenbach.  These 3 tippees and Wittenbach's sister (who didn't know what was going on) made profits of $431,000.

Settlement Terms.   DeCinces agreed to pay $2.5mn in disgorgement, interest and penalties to settle the SEC’s charges.  The others settled, as well.  the 3 others also agreed to settlements.

SEC Staff Credits.   Investigation by Colleen Lynch, David Snyder, John Rymas of SEC's Market Abuse Unit in Philadelphia;  also involved in the investigation:  Elaine Greenberg, Jeffrey Boujoukos, Scott Thompson, Michael Rinaldi of the Phila. Regional Office.    [SEC PR 11-161, 8/4/11]

For further details, go to:   [SEC Litigation Release 22062, 8/4/11]