U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21249 / October 15, 2009
SEC v. Benjamin P. Jones, William F. Jones, III, William T. Dailey, III, and Jeremiah E. Carroll, United States District Court for the Northern District of California, Civil Action No. CV-09-4895 (JCS)
SEC v. Alissa Joelle Kueng, United States District Court for the Southern District of New York, Civil Action No. 09-CV-8763 (BSJ)
SEC Charges Five Individuals with Insider Trading Relating to the Acquisition of Jamdat Mobile, Inc.; Four Individuals to Pay $338,000 in Settlement
On October 15, 2009, the Securities and Exchange Commission filed civil injunctive actions against a former company insider at Jamdat Mobile Inc. ("Jamdat"), a software company that designed games for cell phones, and four individuals for tipping and trading in Jamdat stock prior to an announcement that Jamdat would be acquired by Electronic Arts, Inc. ("EA").
The Commission's complaints allege that throughout the fall of 2005, Benjamin Jones ("Ben Jones"), a former vice president of sales at Jamdat, was apprised of the status of Jamdat's merger discussions, and that he tipped several friends and his brother, William Jones, III ("Bill Jones"), who in turn bought Jamdat stock. According to the complaints, Bill Jones also tipped the information to his friend, William Dailey, III, a former securities trader, and Dailey bought Jamdat stock for his own account based on that tip. The Commission's complaints also allege that, in addition to the series of tips and trades in the fall of 2005, on December 7, 2005, Ben Jones informed Bill Jones that the merger discussions had concluded, that Jamdat was being acquired by EA for $27 per share, and that the transaction would be announced the following day. Within minutes of learning about the impending announcement, Bill Jones tipped his brother-in-law, Jeremiah Carroll, who bought Jamdat stock before the announcement, and told Dailey key information regarding the impending merger.
The Commission further alleges that Dailey conveyed the information that he received from Bill Jones to Alissa Joelle Kueng, a sales specialist at J.P. Morgan Securities Inc., and, based on that information, Kueng then recommended purchasing the stock to a trader in her firm, who bought Jamdat stock prior to the announcement, as well as to several institutional clients, two of whom bought Jamdat stock prior to the merger announcement. The resulting trading profits from Kueng's recommendations were approximately $353,000.
Without admitting or denying the allegations against them in the complaint, Ben Jones, Bill Jones, Dailey, and Carroll, have consented to the entry of final judgments that permanently enjoin them from violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and require each to disgorge their trading profits and pay a civil penalty. Ben Jones, who did not trade on the information, has consented to disgorge approximately $20,000, plus pre-judgment interest, of profits made by some of his downstream tippees, and pay a civil penalty of approximately $80,000; Bill Jones has consented to disgorge approximately $34,000, plus pre-judgment interest, and pay a civil penalty of approximately $60,000; Dailey has consented to disgorge approximately $20,000, plus-prejudgment interest, and pay a civil penalty of approximately $81,000; and Carroll has consented to disgorge approximately $5,100, plus pre-judgment interest, and pay a civil penalty of approximately $5,100. In addition, Dailey has also agreed to the issuance of an administrative order, based on the anticipated entry of an injunction, that bars him from association with any broker or dealer and investment adviser, with the right to reapply after five years.
In a separate complaint filed against Kueng in federal district court in Manhattan, the Commission charges Kueng with violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and seeks a permanent injunction, disgorgement of the trading profits of her tippees, and civil monetary penalties.
The proposed relief in the injunctive actions against Ben Jones, Bill Jones, Dailey, and Carroll is subject to court approval.