Wednesday, July 8, 2015

Why judge went easy on insider-trading broker who violated AA secrecy

Timothy McGee plans appeal of 6-month sentence in Philly Consolidated case

Why judge went easy on insider-trading broker who violated AA secrecy

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(John Lok/The Seattle Times, via Associated Press)
(John Lok/The Seattle Times, via Associated Press)
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The six-month sentence meted former broker and convicted inside-trader Timothy J. McGee by Philadelphia federal court Judge Timothy J. Savage "fell far below the federal sentencing guidelines of 41 to 51 months in prison," wrote Dan Packel in this July 2 report for Lexis/Nexis' Law360. I wrote about the SEC's related civil prosecution of McGee, a former Ameriprise Financial Services executive in Plymouth Meeting, here. SEC complaint here.

McGee learned about the $6 billion sale of James Maguire's publicly-traded Philadelphia Consolidated Holdings to Tokio Marine Insurance through Alcoholics Anonymous meetings he attended with Christopher Maguire, a friend, fellow triathlete, Philadelphia Consolidated executive, and member of the family that founded and controlled the company until its sale to the Japanese firm and continued to run it under Tokio until last year.

The government said McGee illegally passed this insider information to his colleague Michael Zirinsky and that McGee, Zirinsky's father and friends then bought the stock, pocketing a total of more than $1.8 million in illegal profits (including $292,000 for McGee) after the deal went through and the stock rose in value. McGee was convicted of securities fraud and perjury last fall. FBI statement here. SEC civil complaints against both McGee and Zirinsky are still pending. 

"Savage emphasized at sentencing that he was departing from the guidelines because McGee was an otherwise 'exemplary' individual who had already paid dearly though the loss of his reputation and his livelihood," the Law360 report noted. 

“Your charge, not just the conviction, is devastating. You feel it, you know it. That's a punishment, and you're going to live with it,” Savage told McGee, according to the report. While he was convicted of insider trading, a serious charge, as well as lying to SEC investigators, "the consequences of his getting caught and convicted are far different from those who are not stockbrokers,” Savage added.  Despite Savage's apparent leniency, McGee plans to appeal. His lawyers are John Grugan, John Rice, Arthur Makadon and Christine O'Neil of Ballard Spahr LLP. Case is USA v. McGee, USDC E.Pa. 2:12-cr-00236.

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About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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