SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16953 / April 5, 2001
SEC SETTLES CIVIL ACTION AGAINST TWO TENNESSEE BROKERS IN MID OCEAN LTD. INSIDER TRADING CASE
SECURITIES AND EXCHANGE COMMISSION v. CRISTAN K. BLACKMAN, et al., Case No. Case No. 3:99-1072 (Haynes, J.) (M.D. Tenn.).
The Securities and Exchange Commission (SEC) announced today that the United States District Court for the Middle District of Tennessee ordered two stockbrokers, Cristan K Blackman and Charles R. Roberts, to pay disgorgement and civil money penalties totaling almost $450,000 based on allegations that they engaged in insider trading in stock or options of Mid Ocean Ltd. (Mid Ocean).
In November 1999, the SEC filed a complaint against Blackman and Roberts, both of whom formerly worked at the Nashville office of Morgan Keegan & Co. (Morgan Keegan), a brokerage firm, alleging that Blackman learned that Mid Ocean would be taken over shortly before a March 16, 1998 announcement that Exel Ltd., a Bermuda reinsurance company, would acquire Mid Ocean. The SEC alleged that Blackman tipped Roberts about Mid Ocean. The SEC's complaint further alleged that on March 13, 1998, Blackman purchased Mid Ocean call options and 3,000 shares of Mid Ocean stock, and Roberts purchased 1,000 shares of Mid Ocean stock. In addition, the complaint alleged that Blackman tipped his brother and three of his clients, and Roberts tipped twelve of his clients, about Mid Ocean.
The injunction against Blackman, which was entered March 16, 2001, and the injunction against Roberts, which was entered on March 26, 2001, prohibit them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The court also ordered Blackman to disgorge $141,558.50, representing the profits earned by Blackman, his brother and his three clients, plus pre-judgment interest. The court ordered Roberts, jointly and severally with Blackman, to disgorge $175,850, representing the profits earned by Roberts and his twelve clients, plus pre-judgment interest. Finally, the court ordered Blackman and Roberts to pay civil penalties of $78,125 and $12,250, respectively, representing their own profits from trading in Mid Ocean stock or options.
Blackman and Roberts were the last remaining defendants in the SEC's action alleging insider trading in connection with Exel's takeover of Mid Ocean. Previously, the SEC settled its cases against Blackman's alleged tipper, and several others who allegedly traded or tipped others about the Mid Ocean takeover. See Litigation Release No. 16357 (November 17, 1999). The SEC acknowledges the assistance of the American Stock Exchange in investigating this matter.http://www.sec.gov/litigation/litreleases/lr16953.htm