On 20 September 2012, the Securities and Exchange Commission (''SEC'') charged a former senior vice president and board member at insurance company Mercer with illegally providing inside information about an impending merger.
The former board member shared confidential details about takeover negotiations between Mercer and United Fire with friend A, who subsequently tipped the information to friend B. The SEC’s complaint alleges that the three men violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. They intentionally acted to defraud, and engaged in fraudulent acts. The two friends made more than USD 83,000 in illicit profits by illegally trading on the confidential information.
By cooperating with the SEC and voluntarily providing all necessary evidence at the outset of the investigation, and thus saving the SEC time and costs, friend B saw the amount of his penalty reduced to USD 11,380.39. None of the three individuals admit or deny the allegations, and each settlement is subject to court approval.