SEC slaps Toby Scammell with insider-trading charges after he makes a more than $192,000 profit on the deal
Toby G. Scammell probably won’t be winning any boyfriend of the year awards.
The California investment firm employee allegedly used confidential information he weaseled out of his girlfriend to make a 3,000 percent profit on Disney's $4 billion acquisition of Marvel.
That whopping $192,000 payday has left Scammell in hot water with the Securities and Exchange Commission. On Tuesday, he was charged with insider trading.
His girlfriend’s position in Disney’s corporate strategy department purportedly allowed Scammell to gain access to information about the timing and pricing of the deal for the comic book company.
Scammell purchased shares of Marvel just before the stock price shot up 25 percent on the public announcement that the company would be sold to Disney, according to the SEC’s complaint.
“Scammell exploited his romantic relationship for a financial windfall. His misuse of confidential information gave him an unfair and illegal edge over other traders in the markets,” Rosalind R. Tyson, director of the SEC’s Los Angeles Regional Office, said in a statement.
Miles Ehrlich, an attorney for Scammell, denied the allegations and said his client had a history of making speculative trades of the kind he made on Marvel.
"All the SEC has is a naked guess that — well, he 'must have' seen or overheard some sort of insider tip. The truth is: Toby didn't," Ehrlich said in a statement.
"What the SEC has done here is wrong. And it's truly a sad day to see how the government can damage the reputation and future of an innocent young person without having real evidence to back up their charges," he added.
The SEC is seeking a permanent injunction, asking the court to demand Scammell return the money he made with interest and requesting that he be slapped with financial penalties.
To buy Marvel stock, Scammell allegedly used money from his brother’s account without his knowledge. He had been given control over the money while his brother was deployed to Iraq.
Scammell and his girlfriend had multiple discussions about pending deal in the weeks leading up to Disney’s purchase, the complaint reads. It alleges that Scammell gained access to critical information — specifically that Marvel would be sold from $50 per share — through his girlfriend’s position and that he used this insider information to enrich himself.
The SEC alleges that Scammell overheard one or more of her Marvel-related conversations, saw electronic or paper documents she had that related to the acquisition, or gleaned information during his own work-related conversations with her.
Scammell had never traded in Marvel securities prior to this period. In the weeks leading up to the Disney-Marvel announcement, Scammell made several purchases totaling more than $5,400 in Marvel call options. What presumably tipped financial regulators off is that Scammell chose a strike price of $50 and $45, close to the stock’s acquisition price, even though Marvel had never traded above $41.74.
Most of the Marvel options that Scammell purchased were set to expire on Sept. 19, just weeks after the announcement. Scammell’s trades were so unusual that his purchase of options represented 100 percent of the market in many instances.
After the public announcement that Marvel would be acquired by Disney, Scammell sold his Marvel options for a profit of more than $192,000.
No word on if he and his girlfriend are still together — but this can't help the relationship.