SEC Charges Denver-Based Insurance Executive with Insider Trading
The Securities and Exchange Commission today charged an insurance company CEO with insider trading based on confidential information he obtained in advance of a private investment firm acquiring a significant stake in a Denver-based oil and gas company.
The SEC alleges that Michael Van Gilder learned from a Delta Petroleum Corporation insider that Beverly Hills-based Tracinda — which has previously owned large portions of companies such as MGM Resorts International, General Motors, and Ford Motor Company — was planning to acquire a 35 percent stake in Delta Petroleum for $684 million. Van Gilder subsequently purchased Delta Petroleum stock and highly speculative options contracts. He tipped several others, encouraging them to do the same, including a pair of relatives via an e-mail with the subject line “Xmas present.” After Tracinda’s investment was publicly announced, Delta Petroleum’s stock price shot up by almost 20 percent. Van Gilder and his tippees made more than $161,000 in illegal trading profits.
The U.S. Attorney’s Office for the District of Colorado today announced a parallel criminal action against Van Gilder.
“Michael Van Gilder crossed the line when he took advantage of highly confidential corporate information to make trades and reap illicit profits,” said Sanjay Wadhwa, Deputy Chief of the SEC Enforcement Division’s Market Abuse Unit and Associate Director of the New York Regional Office. “He may have thought that he could get away with it, but he is faced today with the consequences of his actions.”
According to the SEC’s complaint filed in federal court in Denver, Van Gilder is the CEO of Van Gilder Insurance Company. He obtained the confidential information about Tracinda’s proposed investment and loaded up on Delta Petroleum stock and options in November and December 2007. He then tipped his broker, a co-worker, and relatives.
The SEC alleges that a mere two minutes after speaking to his source at Delta Petroleum on December 22, Van Gilder e-mailed two relatives with the “Xmas present” subject line and stated, “my present (just kidding) is that I can’t stress enough the opportunity right now to buy Delta Petroleum.” That same day, Van Gilder contacted his broker and arranged to purchase more Delta stock and options for himself. Following the public announcement, Van Gilder reaped approximately $109,000 in illegal profits and his broker, co-worker, and a relative made approximately $52,000.
The SEC’s complaint charges Van Gilder with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and seeks a final judgment ordering him to disgorge his and his tippees’ ill-gotten gains and pay prejudgment interest and a financial penalty, and permanently enjoining him from future violations of these provisions of the federal securities laws.
The SEC’s investigation, which is continuing, has been conducted by members of the SEC’s Market Abuse Unit — Michael Holland and Joseph Sansone in New York and Jeffrey Oraker and Jay Scoggins in Denver — with substantial assistance from Neil Hendelman of the New York Regional Office. Thomas Krysa, Regional Trial Counsel of the Denver Regional Office, Jeffrey Oraker and Michael Holland will handle the SEC’s litigation.
The SEC thanks the U.S. Attorney’s Offices for the District of Colorado and the Southern District of New York as well as the Federal Bureau of Investigation for their assistance in this matter.