UPDATE 4-ISE ex-vice chairman charged with insider trading
(Updates with ISE statement to show Marshall resigned)
NEW YORK, March 13 (Reuters) - The former vice chairman of the International Securities Exchange was charged with insider trading on Thursday, accused of leaking confidential information about the $2.8 billion takeover of the options and stock exchange last year.
U.S. prosecutors said that John Marshall, through his position at the exchange, obtained non-public information about the pending deal and provided it to two of his business partners at a financial consulting firm, who also were charged in the case. ISE said Marshall resigned his position on Thursday after he was charged.
The charges stem from the purchase of ISE by Eurex Frankfurt, a derivatives exchange owned by Deutsche Boerse (DB1Gn.DE) and the SWX Swiss Stock Exchange, prosecutors said. The all-cash deal was announced in April 2007 and closed in December.
Marshall, along with the other defendants, Alan Tucker and Mark Larson, are principals at derivatives consulting firm Marshall Tucker & Associates LLC.
Each is charged with one count of conspiracy to commit securities fraud and 10 counts of securities fraud in a complaint filed in U.S. District Court in Manhattan, the U.S. Attorney's Office said.
The conspiracy charge carries a maximum sentence of 5 years, while each securities fraud count carries a maximum of 20 years in prison.
The U.S. Securities and Exchange Commission also filed a civil insider trading case against the three on Thursday.
Prosecutors said that from 2006 through 2007, Marshall obtained non-public information regarding the ISE-Eurex merger from meetings of the ISE board and executive committee. He gave the information to Tucker and Larson, who then made trades of ISE stock and stock options ahead of the market, they alleged.
Tucker and Larson made profits of about $1.1 million and $30,000, respectively, FBI special agent William Slattery wrote in the complaint.
Lawyers for Marshall, 55, Tucker, 46, and Larson, 44, declined to comment. The three surrendered earlier on Thursday and were granted $200,000 bail.
This is the second major U.S. insider trading case in recent months involving allegations that a corporate director leaked information about a pending deal.
In February, the SEC settled an insider-trading case with David Li, a former Dow Jones board member, who was accused of telling a Hong Kong businessman about News Corp's NWSa.N buyout bid for the company. Li agreed to pay $8.1 million to settle civil charges. He settled without admitting or denying the charges. No criminal charges were filed in that case. (Additional reporting by Martha Graybow, Editing by Gary Hill and Tim Dobbyn)
