NEW YORK, April 15 (Reuters) - U.S. securities regulators on Monday charged a Denver businessman with reaping “substantial” profits using inside information from the former chief executive of Delta Petroleum Corp about an impending investment in the company.
Scott Reiman, founder and president of investment firm Hexagon Inc, agreed to pay nearly $900,000 to settle the civil case brought by the Securities and Exchange Commission, the agency said.
The case against Reiman comes five months after the SEC charged Delta’s former chief executive, Roger Parker, with leaking the news that Beverly Hills-based private investment firm Tracinda Corp had agreed to buy a 35 percent stake in Delta for $684 million.
In October, the SEC also charged Parker’s friend, insurance executive Michael Van Gilder, with trading based on tips he received from Parker.
Van Gilder is also facing a parallel criminal case. He has pleaded not guilty to five counts of insider trading.
Attorneys for Parker and Van Gilder were not immediately available for comment on Monday evening.
As part of his settlement, Reiman neither admitted nor denied wrongdoing. He will be barred from the securities industry and from acting as an officer or a director of a publicly traded company for a minimum of five years.
“It takes time and money to fight the government, and that detracts from the other goals that Scott wanted to accomplish,” said his lawyer, Cliff Stricklin. “He decided to use his energy in a positive way instead of getting involved in a lengthy battle.”
He agreed to pay $398,000 in disgorgement, $93,567 in interest and $398,000 in penalties.
According to the SEC, Reiman bought Delta stock or option contracts on three occasions in late 2007, each time shortly after speaking with Parker.
In November, the Van Gilder Insurance Corp announced that Van Gilder was taking an “indefinite leave of absence.” He also stepped down as CEO of the company.