Feds: Golfers made $550K off insider trading of AMSC stock
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A group of seven friends were charged by federal regulators Friday of illegally making more than $550,000 through insider trading of Devens-based AMSC stock.
The U.S. Securities and Exchange Commission (SEC) accused an unnamed AMSC executive of discussing confidential earnings, contract and corporate development information with close friend Eric McPhail of Waltham between July 2009 and April 2011.
The SEC alleged that McPhail then routinely passed the information along to a group of six friends, most of whom golf together, with each of them trading and profiting off the inside information.
In particular, McPhail is accused of tipping off two of the six off to weaker-than-expected earnings in April 2011 due to a deteriorating relationship between AMSC – formerly American Superconductor – and primary customer Sinovel Wind Group of China. The two others used the information to place bets, through option contracts, that AMSC’s stock price would fall.
When the company’s stock price declined 42 percent, the SEC said the two men secured an unfair financial gain of nearly $470,000. McPhail also tipped the group of six off to information about contracts, expected drops in share price, and inside information about earnings announcements.
Four of the six people allegedly receiving information from McPhail agreed to settle with the SEC and pay restitution and a penalty totaling more than $145,000. Charges against McPhail and two others remain active in U.S. District Court in Boston.
AMSC spokeswoman Kerry Farrell declined to comment on the case.
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