April 21 A former associate at a California investment firm pleaded guilty to securities fraud Monday, admitting to illegally making $192,000 trading ahead of news Marvel Entertainment would be bought by Walt Disney Co, where his girlfriend was working.
Toby Scammell, a San Francisco resident who previously worked at Madrone Capital Partners, pleaded guilty to a single securities fraud count at a hearing in Los Angeles federal court, more than six months after he was criminally charged.
The indictment followed an earlier civil lawsuit launched in 2011, by the U.S. Securities and Exchange Commission, which had last month reached a $800,985 settlement with Scammell.
As part of a plea agreement, Scammell, 29, admitted he learned Disney planned to buy a company people "would recognize right away" from his then-girlfriend, who was working as an extern at the company in summer 2009.
Scammell later learned from a supervisor at a corporate consulting company he worked at that Disney had previously been interested in buying Marvel, Scammell admitted as part of the agreement. While not named in the plea agreement, court records show Scammell had worked at Bain & Co.
Based on this information, Scammell bought call options in August 2009 to buy Marvel stock for $5,465, prosecutors said. In the wake of the deal's announcement on Aug. 31, 2009, Scammell sold his options, netting $192,000 in profits, according to prosecutors.
The trades took place the same month records show Scammell joined Madrone, an investment firm in Menlo Park, California, affiliated with Robson Walton, the chairman of Wal-Mart Stores Inc, and other members of the Walton family.
A court filing by Scammell's lawyers earlier this month said Madrone fired Scammell in February 2010. A call to Madrone seeking comment was not immediately returned.
Scammell faces a maximum of 25 years in prison, though under the plea agreement, prosecutors have agreed to recommend a term of no more than six months in prison followed by six months of home detention.
Sentencing before U.S. District Judge James Otero is scheduled for July 28. A lawyer for Scammell did not respond to requests for comment.
The case is U.S. v. Scammell, U.S. District Court, Central District of California, No. 13-cr-00733. (Reporting by Nate Raymond in New York; Editing by Bernard Prr)