Washington, D.C., Oct. 7, 2008 (LAWFUEL) – The Securities and Exchange Commission today charged a former vice president at national home furnishing retailer Restoration Hardware with insider trading for tipping three friends that the company was about to be acquired, enabling them to make more than $900,000 in unlawful profits when public announcement of the subsequent merger caused the stock price to soar.
The SEC alleges that Ciriaco “Eric” Rivor of Millbrae, Calif., who was Vice President of Treasury at Corte Madera, Calif.-based Restoration Hardware, learned in mid-2007 that the company was about to be acquired by a private equity firm at a substantial premium. Rivor allegedly passed the confidential, non-public information to friends Emmanuel Axiaq of San Carlos, Calif., and Steven Lusardi of San Jose. Rivor told Emmanuel Axiaq to pass the information to his father, Francis Axiaq of Millbrae. The SEC alleges that Rivor instructed his friends to limit the size of their Restoration Hardware stock purchases to prevent detection.
“Combating trading ahead of mergers and acquisitions is among the Commission’s highest priorities,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement. “Insider trading distorts our nation’s markets, and we will aggressively pursue those who seek to take advantage of secret information obtained from company insiders.”
Marc J. Fagel, Regional Director of the SEC’s San Francisco Regional Office, added, “This case makes clear that attempts to ‘stay under the radar’ by trading in small quantities by no means ensures that traders will avoid detection and prosecution.”
According to the SEC’s complaint, filed in federal district court in San Francisco, Emmanuel Axiaq and Lusardi complied with Rivor’s instruction to limit the size of their stock purchases. Meanwhile, Francis Axiaq spent the following weeks amassing nearly 250,000 shares of Restoration Hardware stock. When Restoration Hardware publicly announced the acquisition on Nov. 8, 2007, its stock price soared more than 140 percent, from $2.68 to $6.44 per share. The SEC’s complaint alleges that Emmanuel Axiaq and Lusardi profited by $29,539 and $4,398, respectively, on their stock purchases. The announcement gave Francis Axiaq an illicit potential profit of nearly $900,000.
Rivor, Lusardi, and Emmanuel Axiaq have agreed to settle the SEC’s charges without admitting or denying the allegations. Rivor, who did not personally trade on the information, has agreed to pay a $68,000 penalty. Lusardi has agreed to pay a total of $8,901, including disgorgement of his trading profits, prejudgment interest and a penalty equal to his trading profits. Emmanuel Axiaq has agreed to pay a total of $90,249, including $30,249 in disgorgement of his trading profits and prejudgment interest and a penalty of $60,000. In its non-settled enforcement action against Francis Axiaq, the SEC seeks disgorgement, financial penalties, and other relief.
The Commission acknowledges the assistance of the New York Stock Exchange in this matter.List your legal jobs on the LawFuel Network