SEC charges another Cooper/Apollo insider trader

In April 2015 the United States Securities and Exchange Commission (SEC) charged two men, long-time friends Amit Kanodia and Iftikar Ahmed, after the pair illegally profited from inside information related to Apollo Tyres’ plan to acquire Cooper Tire & Rubber in 2013. Kanodia, whose wife held the post of general counsel at Apollo Tyres prior to the deal’s announcement and was privy to highly confidential information, also shared details with others. A further ‘close friend’, Steven C. Watson, is now the subject of a further case being pursued by the SEC. The US federal agency submitted its case against Watson to the United States District Court in the District of Massachusetts on 17 November.

According to the SEC’s complaint, between around 6 April 2013 and the public announcement of Apollo Tyres’ acquisition plans on 12 June 2013, Watson purchased approximately US$370,000 worth of Cooper Tire stock and options. After the two tyre makers announced the intended acquisition, he liquidated these Cooper Tire holdings and making a profit of almost $170,000 in the process. Watson paid Kanodia more than $22,000 from this sum as a kickback.

Watson has consented to the entry of an injunction from violations of Section 10(b) of the Securities Exchange Act of 1933 and Rule 10b-5 thereunder and to pay disgorgement and a civil penalty to be determined at a later date.  In consenting to the judgment, Watson admitted certain facts, including that he traded based on material non-public information he received from Kanodia, and acknowledged that his conduct violated the federal securities laws.  On 11 September 2015, Watson pled guilty to criminal charges brought by the US Attorney’s Office for the District of Massachusetts stemming from the same conduct.

The SEC’s investigation has been conducted by Jay A. Scoggins and Jeffrey E. Oraker of the SEC Division of Enforcement’s Market Abuse Unit in the Denver Regional Office with assistance from Patrick A. McCluskey of the Market Abuse Unit in the Philadelphia Regional Office.  The case has been supervised by Joseph G. Sansone, Co-Chief of the Market Abuse Unit, and the litigation will be led by Nicholas P. Heinke and Mark L. Williams of the Denver Regional Office. The SEC appreciates the assistance of the U.S. Attorney’s Office in Boston, the Federal Bureau of Investigations, and the Financial Industry Regulatory Authority.