[ by Howard Haykin ]

Played Santa by Tipping Others.

The SEC on Friday charged an insurance company CEO with insider trading based on confidential information he obtained in advance of a private investment firm acquiring a significant stake in a Denver-based oil and gas company.

SEC Profile of Defendant, Michael Van Gilder.   From 2006 to present, Van Gilder, 45, of Denver, CO, has been the CEO and a board member of the Denver-based Van Gilder Insurance Company.  During the relevant time period, Van Gilder and an insider at the Delta Petroleum Corporation were close friends, had known each other for several years, and frequently socialized together.

SEC Findings and Allegations. Van Gilder allegedly learned from his friend, a Delta Petroleum Corporation insider that Beverly Hills-based Tracinda - which previously owned large portions of companies such as MGM Resorts International, General Motors, and Ford Motor Company - was planning to acquire a 35%  percent stake in Delta Petroleum for $684 million.  Van Gilder received the tip regarding the intended acquisition during the weeks leading up to the Tracinda announcement

Based on this information, Van Gilder purchased Delta Petroleum stock and highly speculative options contracts in November and December 2007.  He then tipped his broker, a co-worker, and relatives - encouraging them to do the same, including a pair of relatives via an e-mail with the subject line “Xmas present.”   After Tracinda’s investment was publicly announced, Delta Petroleum’s stock price shot up by almost 20%, all the positions were sold, providing Van Gilder and his tippees with more than $161,000 in illegal trading profits.

The Santa 'Clause'. The SEC further alleged that the tip provided to his relatives was made a mere 2 minutes after speaking to his source at Delta Petroleum on 12/22/07.  In his email, Van Gilder used "Xmas present" in the subject line and stated, “my present (just kidding) is that I can’t stress enough the opportunity right now to buy Delta Petroleum.”

Violations Charges and Intended Sanctions.   The SEC’s investigation continues.  Meanwhile, the U.S. Attorney’s Office for the District of Colorado today announced a parallel criminal action against Van Gilder. 

The SEC’s complaint charges Van Gilder with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.   The Commission seeks a final judgment ordering Van Gilder to pay disgorgement - his and his tippees’ ill-gotten gains, prejudgment interest and a financial penalty. 

SEC Staff Credits.   Investigation continuing conducted by the SEC’s Market Abuse Unit - Michael Holland and Joseph Sansone of New York, and Jeffrey Oraker and Jay Scoggins in Denver.  Substantial assistance from Neil Hendelman of NYRO.  Thomas Krysa, Jeffrey Oraker and Michael Holland will handle the litigation.
 

For further details, go to:   [ SEC PR 12-217, 10/26/12 ]    [ SEC Complaint ].