January 17, 2008 / 6:35 PM / 11 years ago

Shipwreck, treasure, insider trading -- an SEC tale

WASHINGTON (Reuters) - When an exploration team member discovered an anomaly on the ocean floor that turned out to be a $500 million shipwreck, he found a way to get his own share of the booty — insider trading, according to the U.S. regulators who nabbed him.

The Odyssey Explorer is moored in Gibraltar's Port June 6, 2007. The SEC said Ernesto Tapanes was working for Odyssey Marine Exploration Inc, which owns the Odyssey Explorer, as an oceanographic surveying consultant in March 2007 when he identified and photographed an anomaly off the coast of Gibraltar. The SEC said on Thursday that Tapanes agreed to pay more than $216,000 to settle insider trading charges in the case involving the 18th century shipwreck, code-named Black Swan. REUTERS/Anton Meres

The U.S. Securities and Exchange Commission said on Thursday that Ernesto Tapanes, 39, agreed to pay more than $216,000 to settle insider trading charges in the case involving the 18th century shipwreck, code-named Black Swan.

The SEC said Tapanes was working for Odyssey Marine Exploration Inc as an oceanographic surveying consultant in March 2007 when he identified and photographed an anomaly off the coast of Gibraltar.

Excavation efforts soon uncovered more than $500 million worth of silver and gold coins, the largest collection of coins ever excavated from a historical shipwreck site, the SEC said.

The shipwreck is the subject of a federal lawsuit, with Spain contending it is entitled to the treasure if it comes from one of its sunken ships, or if the treasure was removed from its territorial waters.

A federal judge ruled earlier this month that Odyssey Marine must reveal to Spain the exact location of the shipwreck and the items recovered from it.

At the time of Tapanes’ discovery, the company kept the Black Swan a closely guarded secret for weeks and required its workers to sign a confidentiality agreement and to not trade in company stock.

The SEC said Tapanes signed the agreement on April 4, 2007, and that same day started buying Odyssey Marine stock through his E*Trade account.

In total, Tapanes bought 42,000 shares of stock from April 4 through May 15, 2007, the agency said.

Three days after that, Odyssey Marine issued a press release about its discovery and excavation of 17 tons of coins and other artifacts from the Black Swan.

The stock soared that day, closing up almost 81 percent, and continued to rise for several more days.

The SEC said Tapanes started selling his entire Odyssey Marine holdings after the announcement, reaping more than $107,000 in profits.

“His trading essentially was pretty flagrant,” said Teresa Verges, assistant enforcement director in the SEC’s Miami office.

Contact information for Tapanes, a Canadian citizen with residences in Canada and Florida, could not immediately be obtained.

Verges said Tapanes was not represented by an attorney in the SEC case and might currently be out at sea. Tapanes settled without admitting or denying the charges.

Reporting by Karey Wutkowski; Editing by Andre Grenon

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