A pair of freight railway employees and several family members
were charged with allegedly conducting an insider trading scheme
that garnered more than $1 million in illegal profits, according to
the Securities and Exchange Commission.
The SEC alleges that W. Gary Griffiths and Cliff M. Steffes
learned confidential information in early 2007 about the
then-upcoming acquisition of Florida East Coast Industries Inc.,
which owned the freight railway where they worked in Jacksonville,
Fla.
The two men tipped family members with the nonpublic
information, and the traders collectively purchased more than $1.6
million in stock and options ahead of the May 2007 announcement of
the $3.5 billion acquisition of Florida East Coast Industries by an
affiliate of Fortress Investment Group LLC (FIG).
According to the SEC complaint, Griffiths is a resident of
Elkton, Fla., and chief mechanical officer of Florida East Coast.
Steffes, who currently resides in Lisle, Ill., worked in the
railyard in Jacksonville when the insider-trading scheme
occurred.
The SEC alleged the two men tipped Steffes's father and
Griffith's brother-in-law with the confidential information. Also
allegedly tipped were Steffes's two brothers and an uncle.
Without admitting or denying the SEC's allegations, the
uncle--Robert J. Steffes--has consented to a court order, requiring
him to pay disgorgement of $104,981, prejudgment interest of
$15,951 and a penalty of $104,981.
Legal representatives for Griffiths and the Steffes family
members weren't immediately available to comment.
-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com