U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22981 / April 29, 2014
Securities and Exchange Commission v. Saridakis, et al., Civil Action No. 2:14-CV-02397-JS (E.D. Pa.)
SEC Charges Individuals with Insider Trading in Stock of E-Commerce Company Prior to Acquisition by Ebay
On April 25, 2014, the Securities and Exchange Commission charged Christopher Saridakis and Jules Gardner with insider trading in advance of eBay’s acquisition of GSI Commerce, Inc. The SEC alleged that Christopher Saridakis, who lives in Greenville, Delaware, violated a duty of trust as CEO of the marketing solutions division of GSI Commerce by illegally tipping family members and two friends, including Jules Gardner, about the acquisition of GSI.
The SEC’s complaint, filed in U.S. District Court for the Eastern District of Pennsylvania, alleges that Saridakis became aware of the confidential negotiations between GSI and eBay in early 2011 and illegally tipped family members in the weeks leading up to eBay’s acquisition of GSI. The relatives made a combined $41,060 by trading on the material nonpublic information provided by Saridakis.
According to the SEC’s complaint, Saridakis also tipped his longtime friend and former colleague Jules Gardner, who lives in Villanova, Pa. The two regularly exchanged text messages during the weeks leading up to the merger, including an exchange one week before the public announcement in which Saridakis encouraged Gardner to buy shares in GSI. Gardner purchased GSI stock based on the material nonpublic information he received from Saridakis, realizing illicit gains of $259,054.34. Gardner discussed the text messages from Saridakis with two friends who also traded.
The SEC alleges that Saridakis separately tipped his friend Suken Shah, a doctor who resides in Wilmington, Del., with nonpublic information about the deal following a meeting with eBay executives. Shah earned insider trading profits of $9,838 and provided the nonpublic information to two other individuals, who also profited from GSI trades and tipped others.
As a result of the conduct alleged in the complaint, the SEC charged Saridakis and Gardner with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Both Saridakis and Gardner have agreed to consent to judgments, which are subject to Court approval. The judgments will permanently enjoin both defendants from future violations of Section 10(b) of the Securities Exchange Act and Rule 10b-5, bar Saridakis from serving as an officer or director of a public company, order Saridakis to pay $41,060 in disgorgement plus $3,858.22 in prejudgment interest thereon, order Saridakis to pay a penalty of $619,904, and order Gardner to pay $259,054.34 in disgorgement. In a parallel action, the U.S. Attorney’s Office for the Eastern District of Pennsylvania on Friday announced criminal charges against Saridakis.
The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of Pennsylvania, Federal Bureau of Investigation, Financial Industry Regulatory Authority, and Options Regulatory Surveillance Authority.
The SEC’s investigation is continuing.
See also: Press Release: 2014-85