Boy Meets Girl, Boy Gives Inside Information to Girl, SEC Saysby
Couple accused of illegal trading in Apollo purchase of ADT
‘When is it going to BOUNCE?’ Tsai wrote in e-mail, U.S. says
The U.S. Securities and Exchange Commission accused a millennial boyfriend-and-girlfriend couple of trading on inside information about Apollo Global Management LLC’s purchase of ADT Corp earlier this year.
The SEC said Colin Whelehan, 26, learned of the pending deal while working at an advisory firm in 2015, and tipped his girlfriend, Sheren Tsai, 27, who began buying ADT shares in January. The trades generated a profit of almost $24,000, the SEC said.
Whelehan went to Harvard, and Tsai went to New York University. The couple met when they went to work at the same bank shortly after graduating from college, the government said. The SEC identified the firm as "Broker-Dealer A" in the complaint; on their Financial Industry Regulatory Authority registrations, both list Citigroup Inc. as their former employer. They moved into a Manhattan apartment, the government said.
Both left Citigroup in June 2014 to work for unnamed advisory firms. In late 2015, Whelehan learned of the Apollo takeover of ADT, after Apollo asked the firm if its corporate parent, a sovereign wealth fund, would invest with Apollo to help finance the deal.
The firm ended up advising Apollo, and Whelehan was on the deal team that had access to Apollo’s data room containing key financial information about the transaction. He sent the tip about the deal from his work e-mail account to hers, according to the complaint.
Tsai panicked when the price dipped before the deal was announced. "So when is it going to BOUNCE," she wrote to Whelehan in one exchange quoted in the court papers. "I wish I had bought it now, man." He replied: "I told you to average down," a reference to buying more shares at lower prices. But she said she had already put in too much cash to buy more.
Tsai was caught just three days after the deal was announced on Feb. 16, when her firm’s chief compliance officer asked her why she had bought the ADT shares in January. She initially claimed she invested because she thought it was a good company, until confronted with the e-mails with Whelehan on her work account.
Tsai couldn’t immediately be reached for comment at telephone numbers listed for her. Whelehan didn’t return a voice-mail message left at his parents’ house.