They are big $pon$or of the Red Sox, too.
"Watertown golf course again site of insider trading case" by Deirdre Fernandes | Globe Staff August 18, 2014
If you go to Oakley Country Club in Watertown, your safest bet is to just stick to the golf tips.
For the second time in as many months, federal authorities have charged members with trading on inside stock information that they picked up at the club. This time, it involved Eastern Bank’s 2010 acquisition of Wainwright Bank & Trust Co., of Boston.
Last month, the Securities and Exchange Commission alleged an Oakley member participated in an insider trading ring, using information gleaned from an executive at American Superconductor Corp., also a club member, to profit on the Devens-based company’s stock.
The SEC on Monday charged John Patrick O’Neill, a former executive at Eastern Bank, and his friend Robert Bray with insider trading.
Authorities allege that O’Neill, 64, of Belmont, provided Bray, 76, of Cambridge, with confidential information that Eastern Bank planned to buy the much smaller Wainwright.
Bray quickly scooped up 31,000 shares of Wainwright, then sold them once the acquisition became public for twice the price, making a profit of nearly $300,000, according to court documents.
O’Neill also faces separate criminal charges. He was arrested Monday and released on $200,000 bond.
“Corporate executives who misuse their access to confidential information to benefit themselves or their friends are simply stealing from thousands of Americans who invest their savings in the stock market without that insider knowledge,” US Attorney Carmen Ortiz said in a statement.
O’Neill, Bray, and their attorneys did not return phone calls seeking comment.
O’Neill currently works for TD Bank. A spokeswoman for the New Jersey-based institution said officials just became aware of the allegations and are reviewing the situation.
Chummy settings, such as country clubs, give executives a false sense of security that they can get away with sharing illicit stock tips, but they are taking a “huge risk,” said Paul G. Levenson, director of the SEC’s regional office in Boston.
Oakley was at the center of another SEC investigation in July, when regulators charged Eric J. McPhail, a club member who is well known on the amateur golf circuit, of leading a stock-trading ring. McPhail and several other competitive amateur golfers allegedly made $720,000 in profits by using sensitive information about American Superconductor picked up over golf and drinks with another country club member who was an executive at the company.
“These kind of allegations serve as a reminder at Oakley and across the Commonwealth that they have to be careful about sharing information about public companies,” said Peter Miller, Oakley’s president. “I don’t think the membership of Oakley needs a reminder more than anyone else.”
O’Neill and Bray have known each other for years. O’Neill’s college-age son even did some work for the construction company Bray had owned, according to court documents.
In 2010, O’Neill joined Eastern and was part of a small team of bankers who reviewed Wainwright’s loans and checked its finances to determine whether Eastern should buy the bank. Investigators allege O’Neill was privy to Eastern’s plans, and that between May and mid-June of 2010, when the two men met at the country club, he told Bray a sale was imminent. Within two weeks in June, Bray purchased so much Wainwright stock that his activity accounted for 56 percent of the bank’s trading volume during that time.
“I know this sounds kinda crazy,” Bray said in a conversation to his broker about his desire to purchase such a large number of stocks, according to prosecutors.
Two months later, an independent securities regulator made a routine inquiry to Eastern about whether any bank officials knew the investors who traded heavily in Wainwright stock before the sale, according to court documents.
O’Neill ignored the request, the documents said. He went on vacation and did not respond to e-mails from his boss about needing answers for the inquiry. When he was scheduled to return to the office, O’Neill told bank officials that he caught pneumonia, was contagious, and could not come in to respond to the inquiry.
Eastern officials gave him a few extra days to make the required disclosures, but he never did. Instead, he submitted his resignation on Sept. 14, 2010, and told bank officials to contact him through his lawyer. O’Neill also transferred the title of the house he owned to his wife alone, according to court documents.
Eastern Bank declined to comment.
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