SEC Charges Consultant and Friend With Insider Trading in Advance of P.F. Chang’s Merger

The Securities and Exchange Commission today charged a consultant and his friend with insider trading in the options of P.F. Chang’s China Bistro based on nonpublic information about an impending acquisition offer.

The SEC alleges that Richard G. Condon, a consultant to Panda Restaurant Group, tipped Jonathan Ross with confidential details about the bidding process for P.F. Chang’s that he learned while providing executive coaching services to Panda’s top management executives.  Panda was involved in the bidding process, but did not ultimately make a tender offer for P.F. Chang’s.  According to the SEC’s complaint, Ross then purchased risky, out-of-the-money call options for P.F. Chang’s securities and tipped his friend Ali Sagheb so he could do the same.  Ross, Sagheb, and a third trader who is now deceased immediately sold their options for a combined total of approximately $300,000 following a public announcement about the tender offer by a third party for ownership of P.F. Chang’s.

Sagheb, who is named as a relief defendant in the SEC’s complaint, has agreed to pay $19,829, which comprises his illicit trading profits plus interest.  The SEC’s case continues against Condon and Ross in federal court in Los Angeles.

“We allege that Condon exploited his position as Panda’s trusted consultant and confidant to provide his friends with nonpublic information that gave them an unfair advantage in the marketplace,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office. 

The SEC’s investigation was conducted by Sara Kalin of the Los Angeles office with assistance from John Rymas in the Enforcement Division’s Market Abuse Unit, which detected the illegal trading through data analysis tools in its Analysis and Detection Center.  The case was supervised by Marc Blau and the litigation will be led by Gary Leung and Donald Searles.  The SEC appreciates the assistance of the Financial Industry Regulatory Authority.