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Wednesday, November 28, 2012

Former MLB All-Star Doug DeCinces indicted for insider trading

In 2008, DeCinces was told by a close friend and official at Advanced Medical Optics Inc. that Abbott Laboratories planned to pay $21 to $23 a share for the company’s stock, prosecutors said. At the time, Advanced Medical Optics was trading for about $8 a share.

DeCinces began buying Advance Medical stock based on that information and passed along the takeover details to three friends because he wanted to make up for previous investment recommendations that had gone bad, prosecutors said.

When Abbott’s offer was made public, DeCinces sold his newly purchased shares and profited about $1.3 million, court documents show. Abbott acquired Advanced Medical Optics in January 2009.

DeCinces’ three friends each bought and sold Advanced Medical stock and made anywhere from $140,000 to nearly $350,000, authorities said.

Barry`s_Lazy_Boy Posted: November 28, 2012 at 11:42 PM | 26 comment(s) Login to Bookmark
  Tags: angels, business

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   1. Anonymous Observer Posted: November 29, 2012 at 01:17 AM (#4312097)
I bet he wishes he was a congressman.
   2. Tulo's Fishy Mullet (mrams) Posted: November 29, 2012 at 02:23 AM (#4312113)
if the feds are good at one thing, it is tracking the money. Working in a DoJ USA office, and later a district court, it was always stunning how good the gov't is at following the money.
   3. Knock on any Iorg Posted: November 29, 2012 at 02:29 AM (#4312115)
Isn't this what specialists and floor traders do every day with impunity on Wall Street?
   4. greenback calls it soccer Posted: November 29, 2012 at 02:56 AM (#4312119)
The Securities and Exchange Commission previously filed a civil lawsuit against DeCinces that was settled last year when the former major leaguer agreed to pay $2.5 million. In the lawsuit, federal authorities named James Mazzo, Advanced Medical's former CEO, as the person who told DeCinces about the pending deal.

Mazzo is a senior vice president at Abbott and is not facing criminal charges. In August, in response to the SEC lawsuit, Mazzo's attorney said his client would be fully exonerated after a review of the evidence.

The yapper who violated his fiduciary duty is in the clear and the guy without a fiduciary duty just got indicted. I'm sure DeCinces acted in a sleazy fashion, but the purpose of these securities laws is unclear to me.
   5. Swedish Chef Posted: November 29, 2012 at 03:44 AM (#4312123)
The yapper who violated his fiduciary duty is in the clear and the guy without a fiduciary duty just got indicted. I'm sure DeCinces acted in a sleazy fashion, but the purpose of these securities laws is unclear to me.

You can't stop people knowing things, you can make them think twice about acting on that information.
   6. bob gee Posted: November 29, 2012 at 09:35 AM (#4312163)
3 - not exactly; they'd more often get burned on these kind of actions from decinces, especially anyone who was selling options. what you might be thinking of (before the ECNs had such a large role on NYSE trading) was this:

floor trader would get an order to buy a large amount of stock XAX from a hedge fund.
they would (illegally) buy lots of shares of XAX from clients, people who had put in sell orders, etc.
when the stock had gone up a bunch, they would sell it to the hedge fund and profit the difference.

a more legal way was this:
stock would trade at 30.05 (looking to buy 1000) * 30.15 (looking to sell 100)
the order at 30.05 would be from the specialist, showing i'll buy 500 shares, but in reality, wanting up to 50,000.
people might sell to the 30.05, and then it would refresh, showing 1000 shares again.
eventually, the stock will start moving up and then the specialist will have to show his hand more, showing 5,000 on the bid, and sweeping all offers out.
the specialist will then show a large block trade of 50,000 shares near the end of this push; that will be sold to the hedge fund. the specialist's profits will come from the runup.

jeff cooper had a strategy based on this in one of his late 90s books, hit and run trading. that used fractions instead of decimals, but the same idea was present.



   7. Bourbon Samurai in Asia Posted: November 29, 2012 at 10:05 AM (#4312188)
What happens to the guys Decinces told?
   8. bob gee Posted: November 29, 2012 at 10:10 AM (#4312192)
from another article on this:

"DeCinces is also accused of telling Parker, Jackson and Wittenbach about the takeover bid to make up for prior investment recommendations from DeCinces that had soured, according to the indictment. "
   9. Harveys Wallbangers Posted: November 29, 2012 at 10:34 AM (#4312213)
bourbon

at minimum they surrender the money gained and pay a fine.
   10. Harveys Wallbangers Posted: November 29, 2012 at 10:38 AM (#4312216)
i have likely told this story before but my ex son in law told me about a company in early 1998(?) that was doing some interesting cancer research and when i checked them out it looked intriguing and the price was i think a buck or so a share so i purchased a boatload. about 2-4 weeks later there is an article stating that their latest drug, endostatin, may be a cure for cancer. next day stock blows up from a buck to i think hitting 29 a share. i dumped sometime after 25.

so i cleared something like 90k, a measly 90k, and down the road i got grilled about the background to my transactions.

like i could control what the papers publish.
   11. Traderdave Posted: November 29, 2012 at 11:13 AM (#4312246)
It never ceases to amaze me how people get caught trading equities on insider information, particularly on news of takeovers or new drugs, etc, things that make BIG price movements. The Feds watch that stuff, people.

If you must do it, make sure to tick these off:

1) Make sure it's in your wheelhouse. If you're a finance trader, don't play in pharmaceuticals, etc

2) Make sure the size is typical for you. If you usually spend 25M on a trade, keep it close that. Pro's have bigger trades, obviously; still applies to them proportionately.

3) Same type of security. If you're an equity investor, don't buy call options, etc. If you occasionally deal in options, follow 1 and 2 same way.

4) Have SOMETHING in your file that indicates a bit of research. It could be as simple as a copy of a press release you found "interesting." But have something in black & white.

5) Keep your trap shut. You don't talk about your trades normally, do you? Don't mention this one.


But really, don't do it, especially in the equity and options markets. Odds of getting nailed just too high.

   12. RoyalsRetro (AG#1F) Posted: November 29, 2012 at 11:23 AM (#4312258)
WELCOME TO OBUMMER'S AMERICA
   13. Traderdave Posted: November 29, 2012 at 11:24 AM (#4312259)
And for the record, I have never engaged in nor been investigated for insider trading. But I've been in this biz long enough to have seen how these things go down.
   14. bob gee Posted: November 29, 2012 at 11:25 AM (#4312262)
harvey - i got grilled on something where i had several thousand in profits on some daytrading stuff. had to spend a weekend printing out hundreds of pages of transactions (stuff they already had access to), photocopying stuff, etc and a ton more.


(edit: NOT insider trading.)
   15. bob gee Posted: November 29, 2012 at 11:26 AM (#4312264)
#12 - trolling?

it's been the same under any president, any SEC head.
   16. Bring Me the Head of Alfredo Griffin (Vlad) Posted: November 29, 2012 at 11:29 AM (#4312269)
#12 - trolling?


Think he's just joking.
   17. Harveys Wallbangers Posted: November 29, 2012 at 11:31 AM (#4312274)
bob

i have been investigated several times but this was the silliest one.

so far my record with the sec is always indicted never convicted.

//that's a joke. never got indicted. just lots and lots and lots of questions. nosy buggers
   18. Tom T Posted: November 29, 2012 at 11:33 AM (#4312276)
i have likely told this story before but my ex son in law told me about a company in early 1998(?) that was doing some interesting cancer research and when i checked them out it looked intriguing and the price was i think a buck or so a share so i purchased a boatload.


I have a similar case --- one of my neighbors is the chief scientist for a start-up that is darn close to having a drug get approved for cancer treatment (public announcements have been that stage III findings have been good; one of the BigPharmas has an option to buy them for a massive amount of money). However, I suspect I better NOT buy any stock, because, as fellow researchers, he's explained me about how they obtain results, procedures for trials, and how they decide what to do with a drug, etc. The particular drug that is generating the interest has (for many years) been the example he used. Therefore, I am not entirely sure that even if I buy into it now (when there ARE public findings) that it wouldn't turn out that I still know more than I should.

Kind of a bummer....
   19. RoyalsRetro (AG#1F) Posted: November 29, 2012 at 11:53 AM (#4312306)
I keed. We're getting pretty close to being able to put together an All-Financial Fraud team, no?

1B Pete Rose
3B Doug DeCinces
CF Lenny Dykstra
DH Eddie Murray

SP Denny McLain
SP Curt Schilling
RP Byron McLaughlin

Owner: Fred Wilpon
   20. bob gee Posted: November 29, 2012 at 11:57 AM (#4312312)
@16 vlad - thanks! i'm slow on the upkeep, knowing of "MR PRESIDENT!" and chris truby references, but missing others.

@17 harvey - yeah, annoyed me because most of the questions they asked were things that they either had the information for (and i knew they had the information for), or "do you remember this symbol?" yeah, i've got thousands of trades and i remember a few that were non-descript names and weren't huge winners or losers.

i asked if they cared about my *losing* daytrades in one of the stocks that they mentioned, and they wouldn't answer my question.

@18 - if you buy and hold and can cite the public information for WHY you're buying, you're likely ok. but just don't buy options if you've never done it, or put the entire nest egg in it.

   21. Barry`s_Lazy_Boy Posted: November 29, 2012 at 12:06 PM (#4312320)
And for the record, I have never engaged in nor been investigated for insider trading.

Are you saying this just to get it in "black and white" for future investigations? :)
   22. Barry`s_Lazy_Boy Posted: November 29, 2012 at 12:06 PM (#4312321)
Also caught up in the insider trading case was Hall of Famer and DeCinces' former teammate Eddie Murray, who agreed in August to pay nearly $360,000 to settle federal civil charges. Federal investigators said DeCinces told Murray about the impending takeover. Murray neither admitted nor denied wrongdoing.

HOFers get off with a fine.
   23. Never Give an Inge (Dave) Posted: November 29, 2012 at 12:22 PM (#4312346)

In my job where I have access to a lot of inside information, I am periodically (usually after announcement of a transaction) asked by the SEC to look at lists of people or entities and identify those which I know. Presumably these are people who had unusual gains / trading activity in the stock around the time of the transaction. I've never known anyone on the lists, but they are pretty extensive and they are asking a lot of people the same question.
   24. You Know Nothing JT Snow (YR) Posted: November 29, 2012 at 12:39 PM (#4312373)
In my job where I have access to a lot of inside information, I am periodically (usually after announcement of a transaction) asked by the SEC to look at lists of people or entities and identify those which I know.


"In a biblical sense?"
   25. Jolly Old St. Nick Is A Jolly Old St. Crip Posted: November 29, 2012 at 12:44 PM (#4312379)
I keed. We're getting pretty close to being able to put together an All-Financial Fraud team, no?

1B Pete Rose
3B Doug DeCinces
CF Lenny Dykstra
DH Eddie Murray

SP Denny McLain
SP Curt Schilling
RP Byron McLaughlin


And I'm sure you could compile at least as big a team made up of players who've been on the wrong side of financial fraud and shady "investment" advice.
   26. Shredder Posted: November 29, 2012 at 01:08 PM (#4312410)
Still only the second worst thing he's ever done.

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