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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21147 / July 23, 2009

United States v. Michael K.C. Tom (United States District Court for the District of Massachusetts, Criminal Action No. 05-10361-RCL)

SEC v. Michael K.C. Tom, et al., (United States District Court for the District of Massachusetts, C.A. No. 05-CV-11966-NMG)

Defendant in SEC Enforcement Action Sentenced to 12 Months and One Day in Prison on Related Criminal Charges for Insider Trading

The Securities and Exchange Commission announced that on July 16, 2009, the federal court in Massachusetts sentenced Michael K.C. Tom for criminal charges for his role in an insider trading scheme. The sentence ordered Tom to serve 12 months and one day imprisonment, followed by three months of supervised release. The sentencing came nearly three years after Tom's original sentencing hearing and followed a series of appeals that ultimately reached the United States Supreme Court.

Tom was charged in a five-count criminal information on December 28, 2005 that alleged, among other things, that Tom partially owned Global Time Capital Management, LLC, the general partner of a Burlington, Massachusetts based hedge fund, GTC Growth Fund, L.P. The information alleges that prior to establishing Global Time Capital Management, Tom served as a senior analyst at Citizens Financial Group, Inc. in Boston, Massachusetts, where he briefly worked with portfolio analyst, Shengnan Wang, in December 2003. According to the information, on April 29, 2004, Wang called Tom and told him that members of her group were performing due diligence of an acquisition target in Cleveland, Ohio. The information further alleges that on April 29, 2004, Tom purchased securities in three Cleveland-based banks, including Charter One Financial, Inc., and that over the next three days Tom purchased hundreds of call options in Charter One as well as certain shares of Charter One common stock. According to the information, after the close of the market on May 3, 2004, Citizens publicly announced that it intended to acquire Charter One. The information further alleges that on May 5, 2005, the day after the merger was announced, Tom sold most of his stock realizing a profit of $743,505.

On February 15, 2006, Tom pled guilty to the five counts of securities fraud as alleged in the criminal information. On November 28, 2006, Tom was sentenced to three years probation, six months of which were to be served in a community confinement center, and was ordered to pay a special assessment of $500. The U.S. Attorney's Office appealed the criminal sentence and, on October 1, 2007, the First Circuit Court of Appeals reversed the District Court of Massachusetts sentence and remanded the matter for re-sentencing. Subsequently, on January 22, 2008, the United States Supreme Court granted Tom's petition for a Writ of Certiorari and vacated the First Circuit Court of Appeals judgment and remanded the case for further consideration. On April 30, 2008, the First Circuit Court of Appeals remanded the matter to the District Court of Massachusetts for reconsideration.

On September 29, 2005, the Commission filed a related civil injunctive action against Tom, among others, in the U.S. District Court in Massachusetts alleging many of the same facts charged in the criminal action. On May 8, 2008, the Massachusetts federal district court entered final judgments by consent against Tom as well against Global Time Capital Management and GTC Growth Fund. Previously, on June 8, 2006, final judgments by consent were entered against three other defendants in the Commission's action.

For further information, please see Litigation Release Nos. 20565 (May 12, 2008), 19404 (September 29, 2005), and 19729 (June 15, 2006).

 

http://www.sec.gov/litigation/litreleases/2009/lr21147.htm


Modified: 07/23/2009