SECURITIES AND EXCHANGE COMMISSION
Litigation Release 17373 / February 22, 2002
SECURITIES AND EXCHANGE COMMISSION v. PATRICK JOSEPH DANAHER, JOHN THOMAS DOHERTY, ROBERT PAUL WITTMAN, and TIMOTHY FREDRICK WARD, Civil Action No. 01 CV 8431 (TPG) (S.D.N.Y.)
JOHN DOHERTY SETTLES INSIDER TRADING CHARGES
The Commission announced today that on February 21, 2002, the U.S. District Court for the Southern District of New York entered a final judgment against John T. Doherty in a case involving charges of illegal trading and tipping prior to the November 24, 1997 public announcement that The Williams Companies would acquire Mapco Incorporated in a deal worth approximately $3.46 billion. The Commission's complaint alleged that Doherty made $20,375 in trading profits after receiving material, nonpublic information from a Mapco employee about the impending acquisition. He then tipped others, prompting them to buy Mapco securities as well.
The Commission's complaint in this action, filed on September 10, 2001, Litigation Release 17125, specifically alleged that, during the week before the public announcement, Patrick Danaher, a general manager of supply and trading at Mapco's Houston subsidiary, tipped Doherty, a childhood friend. Danaher told Doherty specific information about the impending takeover, including that Mapco was going to be acquired, that each Mapco share would be valued at $46 per share in the acquisition, and that an announcement would be made soon. Based on this information, Doherty purchased Mapco call options four days before the announcement and made illegal profits of $20,375. Doherty also tipped at least four other people, including two codefendants, Timothy Ward and Robert Wittman, both of whom worked with Doherty as oil futures brokers.
Without admitting or denying the allegations in the Commission's complaint, Doherty settled with the Commission by consenting to the entry of an order enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Doherty also consented to pay $106,341, representing disgorgement of profits and prejudgment interest on his trading ($27,993.39), profits and prejudgment interest of two of his tippees ($18,753.86), and a one-time civil penalty equal to Doherty's and four tippees' profits ($59,593.75).
Doherty, an oil futures trader from Syosset, New York, is the last of eight defendants to settle in this and the related case of SEC v. Harry Parker Daily, et al., Civil Action No. 01 CV 8432 (DC) (S.D.N.Y.); Litigation Release 17124. All told, the eight defendants made illegal profits of $85,939.12 and paid a total of $293,034.51 to settle the Commission's claims.