The Securities and Exchange Commission today announced that it has agreed to resolve its insider trading claims against James V. Mazzo, the former Chairman and Chief Executive Officer of Advanced Medical Optics, Inc. (AMO) for allegedly tipping information about his company’s acquisition to his close personal friend, former professional baseball player Douglas V. DeCinces.
The SEC’s complaint alleged that in October 2008 Mazzo executed a nondisclosure agreement with Abbott Laboratories, Inc., as Abbott explored a potential acquisition of AMO. As talks between AMO and Abbott progressed over the ensuing months, Mazzo provided DeCinces with material, nonpublic information about the acquisition on multiple occasions. The complaint further alleges that DeCinces bought AMO securities numerous times after communicating with Mazzo about the progress of the merger talks. DeCinces also allegedly tipped five of his friends, including a former Baltimore Orioles teammate and a businessman, David L. Parker. DeCinces’s trading resulted in over $1.3 million in alleged ill-gotten gains, and the tippees obtained another $1 million in ill-gotten gains.
“The Commission alleges that Mr. Mazzo, a company insider, repeatedly gifted material, nonpublic information to his friend Mr. DeCinces, who in turn tipped his own friends,” said Kelly L. Gibson, Associate Regional Director for Enforcement in the SEC’s Philadelphia Regional Office. “When it comes to insider trading, the fact that the insider does not directly share in the tippee’s ill-gotten gains does not excuse his decision to benefit a friend at the expense of other shareholders.”
Without admitting or denying the allegations, Mazzo agreed to a final judgment that includes a permanent injunction from violations of the antifraud and tender offer provisions of the Exchange Act, orders Mazzo to pay a civil penalty in the amount of $1.5 million, and imposes a five-year officer-and-director bar. The settlement is subject to final approval by the court.
DeCinces and four of his tippees already settled the Commission’s insider trading claims against them. The SEC’s litigation against Parker is continuing.
The litigation is being led by Christopher R. Kelly and supervised by Jennifer C. Barry in the SEC’s Philadelphia Regional Office.