U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23686 / November 9, 2016
United States v. Eric McPhail, et al., 1:14-cv-12958 (D. Mass. filed July 11, 2014)
United States v. Eric McPhail and Douglas Parigian, Criminal Action No. 14-CR-10201-DJC (D. Mass. filed July 9, 2014)
Court Enters Final Judgment Against Defendant in SEC Insider Trading Case Involving Group of Amateur Golfers
On November 7, 2016, the U.S. District Court for the District of Massachusetts entered a judgment against Douglas Parigian, a defendant in an SEC enforcement action filed in July 2014 alleging that Parigian and a group of friends, most of whom were golfing buddies, committed insider trading in the stock of Massachusetts-based American Superconductor Corp. The judgment orders Parigian to pay over $490,000 in monetary sanctions.
The SEC's complaint against Parigian and five other defendants, filed on July 11, 2014, alleged that Parigian illegally traded on material non-public information about American Superconductor Corp. Parigian allegedly received the material non-public information from his friend, defendant Eric McPhail. McPhail's alleged source for the inside information was an American Superconductor executive who belonged to the same country club as McPhail and was a close friend of his. According to the complaint, from July 2009 through April 2011, the executive told McPhail about American Superconductor's expected earnings, contracts, and other major pending corporate developments, trusting that McPhail would keep the information confidential. Instead, McPhail allegedly misappropriated the inside information and tipped his friends, including Parigian, who improperly traded on the information. Parigian allegedly made profits and avoided losses of $295,235 as a result of his illegal insider trading.
Parigian consented to the entry of the judgment against him. The judgment enjoins Parigian from violating Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder, and orders Parigian to pay full disgorgement of his insider trading gains of $295,235 plus prejudgment interest of $50,754, and a civil penalty of $147,618.
Four other defendants have previously settled the SEC's charges by consenting to the entry of judgments permanently enjoining them from violating the antifraud provisions of the Exchange Act, paying disgorgement and civil penalties. The SEC's case against McPhail and another individual, Jamie Meadows, is ongoing.
In a parallel criminal proceeding, in May 2015, Parigian pled guilty to criminal charges of conspiracy and securities fraud for his conduct and was later sentenced to three years of supervised release, including eight months of home confinement. On June 16, 2015, a jury convicted McPhail of conspiracy and securities fraud. On September 18, 2015, McPhail was sentenced to 18 months in prison and two years of supervised release.