U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23652 / September 22, 2016
Securities and Exchange Commission v. Colin Whelehan and Sheren Tsai, Civil Action No. 16-CV-7398 (S.D.N.Y.)
The Securities and Exchange Commission today announced charges against two New York City residents for insider trading in advance of the acquisition of a home security company based on confidential information tipped to the trader by her live-in boyfriend. Both individuals, who were securities professionals during the relevant period, have agreed to settle the SEC's charges.
In a complaint filed in the U.S. District Court for the Southern District of New York, the SEC alleges that Sheren Tsai, who then worked at an investment advisory firm, traded in the securities of ADT Corp. on the basis of tips of material nonpublic information that she received from her romantic partner, Colin Whelehan. The complaint alleges that Whelehan, who was then a Senior Associate at a different investment advisory firm, provided Tsai with inside information that he obtained in the course of his employment regarding an impending acquisition of ADT by funds managed by affiliates of Apollo Global Management, LLC. After receiving this nonpublic information from Whelehan, on January 22, 2016, Tsai purchased 1,500 shares of ADT stock. On that same day, Tsai also recommended to a close relative to purchase ADT stock. Later that day, Tsai's close relative purchased 343 shares of ADT stock. Whelehan did not trade in ADT stock. According to the complaint, when ADT's acquisition was announced on February 16, 2016, its stock price rose 48 percent, resulting in Tsai and her close relative generating illicit profits of approximately $19,500.00 and $4,414.41, respectively.
The SEC's complaint charges Tsai and Whelehan with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the allegations in the SEC's complaint, Tsai and Whelehan have each consented to the entry of judgments permanently enjoining them from violating those provisions of the federal securities laws. In addition, Whelehan has agreed to pay $23,914.41 in civil penalties, and Tsai has agreed to disgorge $23,914.41 in illicit profits plus $521.08 in prejudgment interest, and pay $23,914.41 in civil penalties. The settlements are subject to court approval.
The SEC's investigation was conducted by Gerald Gross and Sheldon Mui, and was supervised by Sanjay Wadhwa, all of the SEC's New York office.
