US Accuses Former GCI Commerce Exec Of Insider Trading In eBay Deal

  on April 25 2014 1:51 PM

(Reuters) - The U.S. government on Friday filed criminal and civil charges accusing a former GSI Commerce Inc. executive of insider trading in advance of eBay Inc's purchase of the e-commerce company.

The case marks the first time the U.S. Securities and Exchange Commision has reached a so-called "non-prosecution" agreement with an individual, an unnamed trader who it said provided "extraordinary" cooperation.

The SEC said Christopher Saridakis, 45, who had led the marketing solutions division of GSI Commerce, gave non public information to two relatives and two friends about eBay's plan to buy his company, and encouraged them to trade on it, leading to more than $300,000 of illegal profit.

GSI's agreement to be acquired by eBay was announced on March 28, 2011, causing GSI's share price to rise more than 50 percent, the SEC said.

The SEC said Saridakis agreed to pay $664,822 and accept a ban from serving as an officer and director to settle its charges.

It also said federal prosecutors in Pennsylvania have brought related criminal charges. Saridakis lives in Greenville, Delaware, court papers show.

Meanwhile, the cooperating individual and five other traders agreed to pay more than $490,000 to settle related charges.

The SEC said three of the traders received tips about GSI directly or indirectly from Saridakis, while the other two traders received it from a different source.

"Although Saridakis' tips spun a web of illegal trading, some of the downstream tippees substantially assisted in our investigation while others hindered it," said Andrew Ceresney, head of the SEC enforcement division.

"The reduction in penalties for those tippees who assisted us, together with the non-prosecution agreement for one of the traders, demonstrate the benefits of cooperating with our investigations."

Details about the criminal case were not immediately available. A spokeswoman for U.S. Attorney Zane Memeger in Philadelphia had no immediate comment. GSI was based in nearby King of Prussia, Pennsylvania.

"Mr. Saridakis accepts responsibility for his actions and regrets any harm he may have caused to family and friends," his lawyer Ivan Knauer Of Pepper Hamilton LLP said. "He is pleased to have been able to resolve this matter with the SEC."

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