U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20565 / May 12, 2008
SEC v. Michael K.C. Tom, et al. (United States District Court for the District of Massachusetts, C.A. No. 05-CV-11966-NMG)
Former Hedge Fund Manager and Investment Adviser Settle SEC Insider Trading Charges
The Securities and Exchange Commission announced today that on May 8, 2008, the Massachusetts federal district court entered final judgments by consent against the remaining defendants in an insider trading case arising out of Rhode Island-based Citizens Bank's May 4, 2004 announcement that it was acquiring Charter One Financial, Inc., a Cleveland-based bank. The settling parties are former hedge fund manager, Michael K.C. Tom of Waltham, Massachusetts, former Burlington, Massachusetts-based investment adviser, Global Time Capital Management, LLC, and former Burlington, Massachusetts-based hedge fund, GTC Growth Fund, L.P..
The Commission's complaint alleged that a then-Citizens employee conveyed certain material, non-public information relating to Citizens' planned acquisition to Global Time Capital Management portfolio manager Michael Tom, a former Citizens employee who ran the GTC Growth Fund. The complaint further alleged that between April 29, 2004 and May 4, 2004, Michael Tom purchased numerous Charter One call options, which increase in value with a rise in the stock price, for his personal account and for the GTC Growth Fund. In addition, Michael Tom traded Charter One securities prior to Citizens' announcement in a joint account he held with his wife and in accounts he managed for his wife and in-laws. Michael Tom also tipped his brother about Citizen's acquisition plan. According to the complaint, Michael Tom's illegal insider trading in Charter One securities resulted in total profits of approximately $743,505.
Michael Tom and Global Time Capital Management, without admitting or denying the allegations contained in the Commission's complaint, each consented to the entry of final judgments against them and permanent injunctions against future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Michael Tom also agreed to pay disgorgement of $543,875.07 plus prejudgment interest of $107,381.63, and a civil money penalty of $150,000. Global Time Capital Management has agreed to pay a civil money penalty of $39,056.93. Relief defendant GTC Growth Fund has agreed to pay disgorgement of $189,868.39 plus prejudgment interest of $23,145.67.
Previously, on June 8, 2006, final judgments by consent were entered against three other defendants in this case. The final judgments against Michael Tom, Global Time Capital Management, and GTC Growth Fund end the Commission's litigation against all of the defendants.