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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23278 / June 8, 2015

Securities and Exchange Commission v. Anthony Andrade, et al., Civil Action No. 15-cv-231 (District of Rhode Island, Complaint filed June 8, 2015)

SEC Charges Director of Rhode Island Bank and Three Others with Insider Trading

The Securities and Exchange Commission today charged Anthony Andrade, a former member of the board of directors of Bancorp Rhode Island, Inc., formerly a publicly-traded bank headquartered in Rhode Island, with tipping inside information about the bank's potential acquisition to three friends and close business associates. The SEC alleges that those individuals then traded on this information and collectively profited by over $80,000 from their insider trading. Two of the traders have agreed to settle the SEC's charges.

According to the SEC's complaint, filed in federal court in Providence, Rhode Island, Bancorp Rhode Island and Massachusetts-based Brookline Bancorp, Inc., publicly announced on April 20, 2011, that Brookline Bancorp would acquire Bancorp Rhode Island. According to the complaint, this acquisition announcement was preceded by weeks of confidential negotiations soliciting the sale of Bancorp Rhode Island, which were led by Bancorp Rhode Island's management and its board of directors, including Andrade.

According to the SEC's complaint, Andrade, of Rehoboth, Massachusetts, illegally tipped inside information about the Bancorp Rhode Island's potential acquisition to his friends and business associates: Robert Kielbasa of Portsmouth, Rhode Island, Fred Goldwyn of Wilmington, Delaware, and Kenneth Rampino of Seekonk, Massachusetts. The complaint alleges that each of the three traded on the inside information Andrade supplied to them, and profited when Bancorp Rhode Island's stock price significantly increased after the April 20, 2011, acquisition announcement. On the day of the acquisition announcement, Bancorp Rhode Island's stock closed at $44 per share, an increase of $13.29 per share, or forty three percent, from the prior day's closing price.

The complaint charges that Andrade, Kielbasa, Goldwyn, and Rampino violated Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, and seeks to have them be enjoined, disgorge their allegedly ill-gotten gains with interest, and pay civil penalties of up to three times their gains. The complaint further seeks to bar Andrade from serving as an officer or director of a public company.

Goldwyn and Kielbasa agreed to settle the SEC's charges, without admitting or denying the allegations, by consenting to the entry of judgments permanently enjoining them from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The judgments also order:

  • Kielbasa to disgorge $39,645 in trading profits plus prejudgment interest of $5,335 and a civil penalty of $39,645, for a total of $84,625.
     
  • Goldwyn to disgorge $23,565 in trading profits plus prejudgment interest of $3,171 and a civil penalty of $23,565, for a total of $50,301.

The SEC's investigation was conducted by William Donahue and Paul Block of its Boston Regional Office. Litigation of this matter will be led by Richard Harper and Kathleen Shields, also of the SEC's Boston Regional Office.

The SEC would like to thank the Financial Industry Regulatory Authority for their assistance in this matter.

SEC Complaint

 

http://www.sec.gov/litigation/litreleases/2015/lr23278.htm


Modified: 06/08/2015