February 8, 2016 / 6:41 PM / 4 years ago

Deal talk during 2011 Super Bowl led to insider trading, SEC says

Feb 8 (Reuters) - A California gas station owner traded on inside information about an expected deal in 2011 involving an e-commerce service provider known as GSI Commerce Inc that an executive told him about while attending the Super Bowl, U.S. regulators said in a lawsuit.

The U.S. Securities and Exchange Commission filed the lawsuit against Robert Munakash, who owns three gas stations in southern California, in federal court in Los Angeles on Friday.

The complaint also targeted Carlos Rodriguez, the gas stations’ general manager, and Marc Winters, Munakash’s broker, for allegedly engaging in insider trading like Munakash ahead of the 2011 announcement that eBay Inc planned to buy GSI for $1.96 billion.

Irving Einhorn, a lawyer for Munakash and Rodriguez, said on Monday that his clients are contesting the civil charges, and that Munakash does not believe he misappropriated any inside information.

A lawyer for Winters, who worked at Wedbush Securities Inc, did not respond to a request for comment, nor did Wedbush.

According to the SEC, the three California men engaged in insider trading based on information Munakash misappropriated from a friend who served as a GSI executive and was busy meeting with private equity firms and eBay about a potential deal.

The SEC said the executive discussed the potential deals involving GSI with Munakash after he traveled to the Super Bowl in February 2011.

In particular, the SEC said the executive told Munakash he expected a private equity firm to make an offer, and if a deal did not work out, another unnamed company had expressed interest.

The morning after returning from the Super Bowl, where the Green Bay Packers defeated the Pittsburgh Steelers, Munakash bought GSI stock and tipped Rodriguez and Winters, the SEC said.

A few weeks later, during a birthday dinner for the executive, the executive told Munakash that GSI’s board would be taking over negotiations with the company interested in buying it, the SEC said.

That prompted Munakash and Rodriguez to buy more stock the next day, the SEC said.

All told, after the eBay deal’s announcement, Munakash and Rodriguez realized more than $178,000 and $24,000 in profits, respectively, while Winters and his clients made $31,000, the SEC said.

EBay last year sold the business formerly known as GSI to consortium led by private equity firm Permira for $925 million.

The case is Securities and Exchange Commission v. Munakash, U.S. District Court, Central District of California, No. 16-00833. (Reporting by Nate Raymond in New York; Editing by Tom Brown)

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