SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17153 / September 27, 2001
Securities and Exchange Commission v. David Kenneth Tomney, Civil Action No. 01 CV 8726 (GBD) (S.D.N.Y.) (filed September 27, 2001)
SEC Files Settled Insider Trading Action Against Former Citibank Attorney
The Commission today filed a complaint in the United States District Court for the Southern District of New York against David K. Tomney, a former Vice President and attorney in the corporate tax group of Citibank, N.A. ("Citibank"). The Commission's complaint alleges that Tomney engaged in insider trading in the securities of Associates First Capital Corp. ("AFS") prior to the September 6, 2000 announcement that Citigroup Inc., Citibank's parent company, had agreed to purchase AFS in a transaction valued at $31.1 billion.
The Commission's complaint specifically alleges that the day before the public announcement, Tomney obtained material, nonpublic information concerning Citigroup's planned acquisition of AFS while attending meetings with senior Citibank executives. Among other things, Tomney was told that Citigroup was then considering an acquisition, that a board meeting would be convened later that day and that, if all went well, the acquisition would be announced the next day. According to the complaint, immediately following these meetings, Tomney, while in possession of this material, nonpublic information, purchased 1000 shares of AFS through his Citibank brokerage account. When the merger was announced the next day, AFS stock closed at $38.63 per share, representing an increase of approximately 38 percent over the previous day's closing price. That same day, September 6, 2000, Tomney sold all of his AFS stock and made a profit of $11,562.50.
Simultaneously with the filing of the complaint, Tomney, without admitting or denying the allegations in the complaint, consented to the entry of a final judgment permanently enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The judgment also requires Tomney to pay a total of $23,562.50, including disgorgement of profits of $11,562.50, prejudgment interest of $437.50, and a civil penalty pursuant to Section 21A of the Exchange Act of $11,562.50.