The Commission filed a settled insider trading case against Mark Begelman, the former chief operating officer of Office Depot. SEC v. Begelman, Civil Action No. 113-CV (S.D. Fla. Filed April 22, 2013). The case is another in a series of insider trading cases involving senior corporate executives.
The action centers on the merger of Bluegreen Corporation and BFC Financial Corporation, announced on November 14, 2011. The two companies had been in negotiations since August 2011. One person was a high ranking Executive of both companies.
The Executive and Mr. Begelman had a close personal relationship for about twenty years. Both were members of the World Presidents’ Organization or WPO. Both the Executive and Mr. Begelman were members of a small group of WPO members known as Forum 91. The Forum 91 members met for dinner monthly and had a yearly retreat. The group was designed to give presidents of companies a confidential setting in which to exchange ideas and receive advice about business and personal issues. Accordingly, all discussions of the group were deemed confidential.
In early November 2011 the Forum 91 members held their annual retreat. According to the complaint “Begelman obtained information from the insider [Executive] during the retreat that BFC was planning to merge with Bluegreen.” The next day Mr. Begelman spoke with his stock broker and purchased 25,000 Bluegreen shares. Those shares were sold the day of the deal announcement, yielding a profit of $14,949.34. The complaint alleges violations of Exchange Act Section 10(b).
To resolve the case Mr. Begelman consented to the entry of a permanent injunction prohibiting future violations of the Section cited in the complaint. He also agreed to disgorge his trading profits and to pay prejudgment interest and a civil penalty equal to the amount of the trading profits. See also Lit. Rel. No. 22682 (April 22, 2013).