SAN JOSE, Calif. -- The U.S. Securities and Exchange Commission (SEC) said that it has charged a former partner at Ernst & Young LLP and two others in an insider trading scheme that resulted in nearly $600,000 in illicit profits.
The insider trading scheme included information about Freescale Semiconductor Inc. in 2006, when the chip maker was acquired by private equity firms, according to reports. It also involves various transactions with ATI Technologies Inc., now owned by Advanced Micro Devices Inc. (AMD).
The SEC's insider trading case alleges that from 2006 through 2007, James Gansman, a former partner in Ernst & Young's Transaction Advisory Services department, tipped his friend, Donna Murdoch, ''about the identities of at least seven different acquisition targets of clients who sought valuation services from his firm,'' according to the SEC.
According to the SEC's complaint, ''Murdoch used the non-public information to trade in the securities of the target companies; to tip her father, who also traded; and to make recommendations to two others, who traded as well.''
According to the SEC's complaint, ''Gansman misappropriated the information about pending acquisitions on numerous occasions in breach of a duty of confidentiality owed to E&Y and its clients.''
Murdoch was a registered securities professional and managing director of a Philadelphia-based broker-dealer and investment banking firm. The complaint alleges ''that she used the non-public information provided by Gansman to tip her father, Gerald Brodsky, who also is named as a defendant, and to make recommendations to two others.''
According to the complaint, ''Murdoch traded in the securities of at least seven companies based on the non-public information that they were acquisition targets of E&Y's clients, resulting in at least $392,035 in illegal profits.''
''She provided information about one of the pending acquisitions, Freescale Semiconductor, to Brodsky, who traded on this information through a nominee account. His illegal profits totaled $63,400. The complaint alleges that Murdoch also recommended trading in the securities of two of the target companies, Freescale and ATI Technologies, to other individuals who traded for profits of $140,760,'' according to the SEC.