A Belmont man and former Eastern Bank Corp. executive faces charges of conspiring to commit security fraud after allegedly telling a friend at the Oakley Country Club about an impending purchase by the bank.
John Patrick O’Neill, 64 of Belmont allegedly told a friend that Eastern Bank was about to buy Wainwright Bank & Trust Co. while the pair was at the Watertown country club. in June 2010, according to a press release from United States Attorney Carmen Ortiz’s Office. O’Neill, was a Senior Vice President and Senior Credit Officer at the bank, passed on the information two weeks before the sale, according to the release.
“Insider trading is a serious crime that undermines the integrity of our financial markets,” Ortiz said. “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 inside knowledge. We will continue to aggressively investigate and prosecute this kind of behavior, whether it happens in the boardroom, on the golf course, or over drinks at a bar.”
The day after the pair met, the friend asked his broker about buying 25,000 shares of Wainwright stock, according to the release. The next two weeks the stock prices was between $8.85 and $9.90, and Eastern Bank agreed to purchase Wainwright for $19 per share.
O’Neill faces a maximum sentence of five years in prison, followed by three years of supervised release and a fine of the greater of $250,00 or twice the gross gain or loss, according to Ortiz’ office. Actual sentences for federal crimes are typically less than the maximum penalties.
This is the the only time an alleged insider trading incident has occurred at Oakley Country, according to a report in the Boston Globe. Last month, Eric J. McPhail of Waltham was charged with violating federal anti-fraud laws for passing on information he got from a fellow member of the club who was senior executive at American Superconductor Corp. Four others were charged, but the executive was not, according to the Globe story.