(Reuters) - Three California men, including a father-and-son duo, were charged on Wednesday by the U.S. Securities and Exchange Commission with insider trading ahead of General Electric Co’s 2010 purchase of cancer diagnostics company Clarient Co.
The SEC said John McEnery III, 73, agreed to pay $101,557 in fines, disgorged profit and interest to settle. His son John McEnery IV, 50, agreed to pay $7,074; and his longtime friend Michael Rawitser, 74, agreed to pay $60,854, the SEC said.
None admitted wrongdoing. Court approval is required.
The SEC said the elder McEnery learned in advance about the roughly $580 million merger from a senior Clarient director he had dated on and off since the early 1990s and lived with for several years, and with whom he had a “history” of sharing confidences.
McEnery bought Clarient stock in the three weeks before the merger was announced on Oct. 22, 2010, and tipped his son and Rawitser, who then made their own trades, the SEC said.
It said the son wrote his father on Oct. 19: “No announcement today. Stock went up a few cents,” prompting the father to reply “Thursday!” and the son to write back “Sweet.”
GE’s healthcare unit announced the merger on a Friday, causing Clarient shares to rise 33 percent that day.
The father lives in Capitola, the son in San Jose, and Rawitser in Paso Robles, the SEC said.
Brian Getz, a lawyer for the father, said: “I have never met a finer person in my life. This whole investigation resulted from something which, from his point of view, was completely innocent.”
Randy Luskey, a lawyer for the son, said his client is pleased to put the matter behind him. Rawitser’s lawyer did not immediately respond to a request for comment.
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