U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23460 / February 8, 2016
Securities and Exchange Commission v. Robert M. Munakash, Carlos A. Rodriguez, and Marc Winters, Civil Action No. 2:16-cv-00833 (C.D. Cal. filed Feb. 5, 2016)
SEC Charges Three Individuals with Insider Trading in Stock of E-Commerce Company
On Friday, February 5, 2016, the Securities and Exchange Commission charged a Los Angeles business owner, one of his employees and his registered representative with insider trading in advance of GSI Commerce Inc.'s (GSIC) acquisition by eBay, Inc.
The SEC's complaint, filed in federal court in Los Angeles, alleges that:
- During a trip to the Super Bowl, Robert M. Munakash learned from a close friend, an executive at GSIC, that GSIC was likely to engage in a strategic transaction with a private equity firm or be acquired by another company.
- Munakash used this information to purchase GSIC stock for his personal account and tipped his mentee and employee, Carlos Rodriguez, and his registered representative, Marc Winters.
- Rodriguez used the information to purchase GSIC stock for himself and tipped a close relative, who also purchased GSIC stock.
- Winters used the information to first purchase GSIC stock for two discretionary client accounts, and then to purchase GSIC stock for his personal account.
- Munakash learned additional information about the potential acquisition from his friend and GSIC executive a few weeks after the Super Bowl, during the executive's birthday dinner. The following day, Munakash used this information to purchase additional GSIC stock in his parents' account and again tipped Rodriguez, who also purchased additional GSIC stock.
- Following the public announcement of GSIC's proposed acquisition by eBay on March 28, 2011, GSIC's stock price increased by over fifty percent.
- Munakash, Rodriguez and his relative, and Winters and his clients, all sold their respective positions in GSIC stock within hours of the announcement, realizing over $250,000 in ill-gotten gains.
The SEC's complaint charges Munakash, Rodriguez and Winters with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking injunctive relief, disgorgement of allegedly ill-gotten gains with interest, and civil penalties from the defendants.
The SEC's investigation was conducted by Jessica L. Matelis and Jessica Medina, and supervised by Jeffrey B. Finnell. The SEC's litigation will be led by Joshua Braunstein, Daniel Maher, Gary Leung, Ms. Matelis and supervised by Cheryl Crumpton.