U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21079 / June 10, 2009
Securities and Exchange Commission v. Phillip Macdonald, Martin Gollan, and Michael Goodman, Civil Action No. 09-CV-5352 (HB) (S.D.N.Y. filed June 10, 2009)
SEC CHARGES HUSBAND OF FORMER MERRILL LYNCH EMPLOYEE AND TWO BUSINESS ASSOCIATES WITH INSIDER TRADING
The Securities and Exchange Commission ("Commission") today filed a complaint in the United States District Court for the Southern District of New York alleging that three Canadian citizens, Phillip Macdonald, Martin Gollan, and Michael Goodman, engaged in insider tipping and trading in the securities of several companies ahead of public announcements of business combinations. One of the business combinations involved a tender offer. The Commission alleges that Macdonald, Gollan, and Goodman each violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b 5 thereunder and that Macdonald and Goodman also violated Section 14(e) of the Exchange Act and Rule 14e 3 thereunder. Goodman has agreed to settle the Commission's charges against him.
The Commission's complaint alleges the following: Between January and June 2005, Goodman's wife, while employed as an administrative assistant with Merrill Lynch Canada, Inc., learned the identities of a number of companies involved in contemplated, but unannounced, business combinations. When they were discussing what was happening at her job, Goodman's wife sometimes mentioned the information to Goodman, expecting that he would keep it confidential. Goodman instead misappropriated the information by disclosing it to his friend and business associate, Macdonald and to another business associate, Gollan. On the basis of the information, Macdonald and Gollan then purchased securities ahead of announcements of business combinations, including the securities of Creo Inc., Masonite International Corporation, Eon Labs, Inc., Performance Food Group Company, Great Lakes Chemical Corporation, Shopko Stores, Inc., Electronics Boutiques Holdings Corp., and Commercial Federal Corporation. As a result of their illegal trading, Macdonald made over $900,000 in ill-gotten gains, and Gollan made over $90,000 in ill-gotten gains.
Without admitting or denying the allegations in the Commission's complaint, Goodman has consented to entry of a proposed final judgment permanently enjoining him from further violations of Sections 10(b) and 14(e) of the Exchange Act and Rules 10b 5 and 14e 3 thereunder. Additionally, the final judgment finds Goodman liable for disgorgement of the trading profits of Macdonald and Gollan in the amount of $1,023,054, plus prejudgment interest of $251,301.42, but waives payment of those amounts and does not impose a civil penalty, based on his sworn Statement of Financial Condition. Goodman's settlement is subject to approval by the District Court.
The Commission seeks a final judgment ordering Macdonald and Gollan to disgorge all ill-gotten gains, with prejudgment interest thereon; imposing civil money penalties; and enjoining Macdonald from future violations of Sections 10(b) and 14(e) of the Exchange Act and Rules 10b 5 and 14e 3 thereunder and Gollan from future violations of Section 10(b) of the Exchange Act and Rule 10b 5 thereunder.
The Commission acknowledges the assistance and cooperation of the Ontario Securities Commission.