The SEC is watching you, Oakley Country Club!

For the second time in two months, the SEC brought an insider trading case against individuals who shared insider information about upcoming acquisitions with their golfing buddies from Oakley Country Club in Watertown, Mass. Paul G. Levenson, director of the SEC’s Boston Regional Office, stated that

country clubs or similar venues may give people a false sense of security that leads them to think they can get away with trading on unlawful stock tips. But as in any social setting, people who trade securities based on confidential information they receive are taking a huge risk that their illegal tipping and trading will be identified by the SEC.

The SEC alleged in the lawsuit, which was filed on Monday of this week, that Patrick O’Neill, then a senior vice president at Eastern Bank, learned that Eastern Bank was about to acquire Wainwright Bank & Trust Company. O’Neill allegedly then shared that information with Robert H. Bray, a golfing buddy at Oakley C.C., and Bray purchased shares in Wainwright Bank.  When the Wainwright acquisition was publicly announced, Wainwright’s stock price jumped nearly 100 percent, allowing Bray to sell his shares for nearly $300,000 in illicit profits according to the SEC. The U.S. Attorney’s Office for the District of Massachusetts also announced this week that it has filed criminal charges against O’Neill.

The joint SEC/DOJ action against the Oakley C.C. member comes less than two months after the SEC filed an unrelated lawsuit against what it referred to as a group of "amateur golfers." On July 11, 2014, the SEC alleged that Eric McPhail repeatedly provided non-public information about a company called American Superconductor to "six others, most fellow competitive amateur golfers," allowing the group to make more than $554,000 in illegal profits from insider trading in that company's stock. According to the SEC, McPhail’s source for the inside information "was an American Superconductor executive who belonged to the same country club [Oakley C.C.] as McPhail and was a close friend."  

When announcing the McPhail case back in July, the SEC's Levenson also warned that whether "tips are passed on the golf course, in a bar, or elsewhere, the SEC will continue to track down those who seek an unfair advantage trading stocks,” and that proved to be prophetic at Oakley C.C. just six weeks later. Oakley's president, Peter Miller, said the two cases "serve as a reminder at Oakley and across the Commonwealth that [people] have to be careful about sharing information about public companies.” He added, however, that “I don’t think the membership of Oakley needs a reminder more than anyone else.”

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