SEC Charges Former Disney Employee's Ex-Boyfriend With Insider Trading

UPDATE: Insider Trading Boyfriend Fights Back Against SEC Accusations

This post has been updated.

A twist on a tale as old as time: Betrayal hurts, especially when your boyfriend's using you for insider stock tips.

The Securities and Exchange Commission has charged 26-year-old Toby Scammell with using knowledge he took from his then-girlfriend to make a 3000 percent profit on the Walt Disney Company's 2009 acquisition of Marvel Entertainment, Inc.

At the time of the August 31st acquisition, Scammell's girlfriend was working for Disney as an extern. According to the SEC's complaint, the couple had been dating for two years when Scammell allegedly used knowledge he gained "through overhearing one or more of his girlfriend's Marvel-related conversations, by seeing electronic
or paper documents in her possession related to the Marvel acquisition, or through her conversations with him" to make an eventual $192,497 in profits.

Evidence such as Scammell's internet search history around the time of the deal, which was peppered with keywords like "insider trading," "Williams Act," and "Rule 10b-5" may be circumstantial, but the call options he purchased soon after are far more damning. Scammell purchased 647 Marvel call options worth $5,465 in August 2009 -- purchases that were especially suspicious given they often represented more than 90 percent daily market volume for those options, according to the SEC. Likewise, many of the options were purchased at prices of $45 or $50, values which exceeded Marvel's highest ever stock price of $41.74 at the time.

Scammell, who was living with his girlfriend at the time, made over half of the purchases secretly using funds from his brother who, having been deployed as a soldier in Iraq, put Scammell in charge of his finances, the SEC said.

According to the SEC complaint, Scammell never revealed the profits he made on the Marvel acquisition to either his brother or ex-girlfriend.

"Scammell exploited his romantic relationship for a financial windfall," Rosalind R. Tyson, Director of the SEC’s Los Angeles Regional Office, said in a release. "His misuse of confidential information gave him an unfair and illegal edge over other traders in the markets."

Update: Toby Scammell is fighting back against SEC's allegations in a email to reporters, the New York Times reports. Beyond questioning the accusations against him, Scammell has questioned the credibility of the SEC as a whole. “They have ignored all the evidence and sued me based on nothing more than a hunch and a flawed understanding of how people invest in the real world,” he wrote. Read more at the New York Times.

Popular in the Community

Close

What's Hot