U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19729 /June 15, 2006
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 Citizens Bank Employee and Two Others Settle SEC Insider Trading Charges
The Securities and Exchange Commission announced today that on June 8, 2006, the Massachusetts federal district court entered final judgments by consent against three defendants in an insider trading case arising out of Citizens Bank's May 4, 2004 announcement that it was acquiring Charter One Financial, Inc., a Cleveland-based bank. The settling parties are former Citizens employee Shengnan Wang of Natick, Massachusetts; her husband, Hai Liu of Natick, Massachusetts; and David Tom of Denver, Colorado.
The Commission's complaint alleged that Wang, Hai Liu, and David Tom, along with Global Time Capital Management, LLC, a Burlington, Massachusetts-based investment adviser, and its portfolio manager and principal, Michael K.C. Tom of Waltham, Massachusetts, traded or tipped others to trade in Charter One securities on the basis of material non-public information, in violation of a fiduciary or similar duty of trust and confidence. According to the complaint, Wang conveyed certain material, non-public information relating to Citizens' planned acquisition to her husband, Hai Liu, and to Michael Tom, a former employee of Citizens who ran a hedge fund in which Wang and her husband had invested approximately $60,000. The complaint further alleged that Michael Tom's illegal insider trading in Charter One securities resulted in total imputed profits of approximately $743,505. The complaint also alleged that Michael Tom and Wang's husband, Hai Liu, tipped their brothers, David Tom and Zheng Liu, respectively, about Citizens' acquisition plan. As a result, both David Tom and Zheng Liu traded in Charter One securities prior to Citizens' announcement. David Tom's trading resulted in imputed profits of approximately $39,089, while Hai Liu's brother, Zheng Liu, made imputed profits of approximately $2,736.
Wang, Hai Liu, and David, 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. Wang has also agreed to pay disgorgement of $9,761.91 plus prejudgment interest, and a civil money penalty of $19,523.82. Hai Liu has agreed to pay disgorgement of $2,736 plus prejudgment interest, and a civil money penalty of $8,208. David Tom has agreed to pay disgorgement of $39,089 plus prejudgment interest, and a civil money penalty of $39,089.
The Commission's case is pending against Michael Tom and Global Time Capital Management.
The Commission acknowledges the assistance of the New York Stock Exchange and the American Stock Exchange in its investigation.
For further information, please see Litigation Release Number 19404 (September 25, 2005).