Court Enters Judgments Against Remaining Defendants in SEC Insider Trading Case Involving Massachusetts-Based Group of Amateur Golfers
Litigation Release No. 24053 / February 20, 2018
Securities and Exchange Commission v. Eric McPhail, et al., 1:14-cv-12958 (D. Mass. filed July 11, 2014)
United States of America v. Eric McPhail and Douglas Parigian, No. 14-CR-10201-DJC (D. Mass. filed July 9, 2014)
On January 10, 2018 and February 16, 2018, the U.S. District Court for the District of Massachusetts entered final judgments against Jamie Meadows and Eric McPhail, respectively, defendants in an SEC enforcement action filed in July 2014 alleging that McPhail, Meadows and others committed insider trading in the stock of Massachusetts-based American Superconductor Corp. The SEC has now obtained final judgments against all of the defendants in this case, and has obtained orders for full disgorgement of all ill-gotten gains against the traders.
The SEC's complaint, filed on July 11, 2014, alleged that McPhail repeatedly provided non-public information about American Superconductor to six of his friends, including Meadows. McPhail's source of inside information was an American Superconductor executive who belonged to the same country club as McPhail and was a close friend. 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, while McPhail instead misappropriated the inside information and tipped his friends, including Meadows, who improperly traded on the information. The SEC's complaint alleged that the six traders profited by a total of over $554,000 through their illegal insider trading.
The judgment against McPhail, to which he consented, enjoined him from committing future violations of the antifraud provisions of federal securities laws. In June 2015, McPhail was convicted after a jury trial in a related criminal insider trading action brought by the U.S. Attorney for the District of Massachusetts, and in September 2015 he was sentenced to 18 months in prison and two years of supervised release. The judgement against Meadows enjoined him from violating the antifraud provisions of the federal securities laws, ordered him to pay full disgorgement of $191,521 plus prejudgment interest of $41,841, and ordered him to pay a civil penalty of $191,521. Meadows had consented to a judgment with the injunction and disgorgement and interest amounts, and the court determined the amount of the penalty after a hearing.
The five 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 full disgorgement and civil penalties. The judgments against McPhail and Meadows bring the SEC's case to a conclusion.