Local ex-hedge fund trader, Wharton classmate pal nailed for insider trading
Wake up and good morning. Here's a classic case of insider trading right in our own Tampa Bay backyard that netted one local trader nearly $14 million. If only his own subsequent trades had not blown all the money he made. And, oh yeah, if only the finally-more-energetic Securities and Exchange Commission had not discovered him and fined him $600,000.
Here's the tale in brief. Stephen R. Goldfield, 46, who lives in Odessa and ran the hedge fund firm Imperium Capital Management at 1 Tampa City Center in downtown Tampa, was charged with making $13.98 million in illegal profits by trading in MedImmune securities before AstraZeneca agreed to acquire the company for more than $15 billion.
Also accused by the SEC is James W. Self Jr., 45, of Doylestown, Pa. Self's a Goldfield buddy and former classmate at the University of Pennsylvania's Wharton School of Business. Self, the SEC says, tipped Goldfield to the MedImmune sale process with information he learned as an executive director of business development of Merck, the New Jersey pharmaceutical giant.
No tipster ratted on Goldfield or Self. Nor did any stock exchange flag suspicious trading in this case. Rather, the Wall Street Journal reports here, SEC investigators traced relationships and trading patterns stemming from a probe that in 2008 had involved other Wall Street players and different securities altogether.
Self and Goldfield occasionally collaborated on potential business ventures, including discussions to acquire or license various food and health care related products. In or around 2003 or 2004, the SEC says Self also borrowed money from Goldfield on two occasions in order to buy shares of banks that were going public.
Self began tipping Goldfield to details about a MedImmune deal in March of 2007 and Goldfield began trading at once. The SEC says the two talked often by cell phone and, in April of that year, Self told Goldfield that the "weather was in the 50s" or words to that effect. That was meant to signal Goldfield that a bid for MedImmune was going to be in the $50s.
Goldfield realized actual profits of $13,978,752 from his trading in MedImmune from March 15 through April 26, 2007. But the SEC claims that just one month later, Goldfield lost all of those profits by aggressively trading index put options.
Goldfield still resides in Odessa, is currently unemployed but apparently makes his living trading securities on his own behalf, which suggests he's still got enough money left -- post SEC fine -- to at least dabble in the markets.
Goldfield’s settlement with the SEC called for him to pay $16.65 million, reflecting the profit he made plus interest. But he will only pay only $600,000 -- for the record that's $16,050,000 less than he once made on insider trading -- because he lost all the illegal profit while trading index put options. Oh yes, the SEC notes Goldfield did not admit wrongdoing. As for Self, he walked away with a $50,000 fine.
The SEC cited the men's "statement of financial condition" as a factor in those amounts. Goldfield apparently isn't talking but his attorney, Robert Heim of Meyers & Heim LLP in New York, told Bloomberg News that Goldfield is "happy with the settlement and looking forward to putting the matter behind him."
Here's the complete SEC complaint against this dynamic duo.
-- Robert Trigaux, Times Business Columnist