(October 28, 2012) — The Securities and Exchange Commission has charged a former insurance company CEO — Michael Van Gilder of Van Gilder Insurance Company — with insider trading.
Van Guilder Insurance Co. subsequently issued a press release indicating that Van Gilder was stepping down as CEO for personal reasons.
The allegation is based on confidential information the CEO obtained in advance of a private investment firm acquiring a significant stake in a Denver-based oil and gas company. According to the US regulator, Van Gilder learned from a Delta Petroleum Corporation insider that Beverly Hills-based Tracinda was planning to acquire a 35% stake in Delta Petroleum for $684 million. Consequently, Van Gilder purchased Delta Petroleum stock and highly speculative options contracts. “He tipped several others, encouraging them to do the same, including a pair of relatives via an e-mail with the subject line ‘Xmas present,'” a statement by the SEC said. After Tracinda’s investment was publicly announced, Delta Petroleum’s stock price shot up by almost 20%.
“Michael Van Gilder crossed the line when he took advantage of highly confidential corporate information to make trades and reap illicit profits,” said Sanjay Wadhwa, deputy chief of the SEC Enforcement Division’s Market Abuse Unit and associate director of the New York Regional Office. “He may have thought that he could get away with it, but he is faced today with the consequences of his actions.”
According to the SEC’s complaint filed in federal court in Denver, Van Gilder obtained the confidential information about Tracinda’s proposed investment and increasing his holdings of Delta Petroleum stock and options in November and December 2007. Following the public announcement, Van Gilder allegedly reaped approximately $109,000 in illegal profits and his broker, co-worker, and a relative made approximately $52,000.