U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 18086 / April 14, 2003
United States v. Anthony Chrysikos and Michael Martello, 02 Cr. 1247 (JSR) (S.D.N.Y.).
FORMER GE CAPITAL VICE PRESIDENT AND HIS TIPPEE, AN AMERICAN KUNG-FU INSTRUCTOR, RECEIVE PRISON SENTENCES IN INSIDER TRADING PROSECUTION
Traded Immediately Ahead of GE Capital Bid for Heller Financial
The Commission announced today that on April 3, 2003, the U.S. District Court for the Southern District of New York imposed a sentence of fifteen months incarceration on Anthony Chrysikos in an insider trading prosecution. The sentence was based on Chrysikos' October 2002 plea of guilty to one count of securities fraud and one count of conspiracy to commit securities fraud. In addition to the term of incarceration, Chrysikos was fined $4,000 and sentenced to three years supervised release.
In July 2001, Chrysikos, then a GE Capital Vice President of Finance, tipped Michael Martello, an American Kung-Fu instructor and Web page designer living in Taipei, Taiwan, regarding a contemplated business combination between General Electric Capital Corp and Heller Financial, Inc. (GE Capital is a subsidiary of the General Electric Company.) On the basis of the non-public information, Martello traded in securities of Heller Financial immediately ahead of the July 30, 2001, initial public announcement of the contemplated business combination. Martello garnered $157,259 in illicit gains from those trades, on a one-trading-day investment of $11,000. He subsequently shared those proceeds with Chrysikos.
The Commission today also announced that on February 19, 2003, the U.S. District Court for the Southern District of New York imposed a sentence of eight months incarceration and three years supervised release on Martello in the insider trading prosecution. Martello also pleaded guilty in October 2002 to one count of securities fraud and one count of conspiracy to commit securities fraud.
On March 7, 2002, the Commission filed a civil injunctive action in the United States District Court for the Southern District of New York against Martello and Chrysikos, alleging that they engaged in tipping and insider trading immediately ahead of the GE Capital bid for Heller Financial. The Commission's complaint alleges that Chrysikos tipped Martello by means of telephone conversations with Martello's mother on July 26 and 27, 2001. The Commission alleged that Chrysikos and Martello each violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rules 10b-5 and 14e-3. The Commission's action is styled Securities and Exchange Commission v. Anthony Chrysikos and Michael Martello, Defendants, and Marie Martello, Relief Defendant, 02 CV 1825 (HB) (S.D.N.Y.). In the Commission's litigation, Chrysikos and Martello consented to disgorge, and did disgorge, the entire amount of their illicit gains, plus prejudgment interest thereon. The Commission's action remains pending before the District Court.
See Litigation Rel. No. 17404 (March 7, 2002); Litigation Rel. No. 17649 (August 1, 2002).