(December 21 – 17:45 ET) – The Securities and Exchange Commission is bringing insider
trading charges against an investment banker, his Canadian porn star-mistress, and a friend of
the actress.
The SEC has filed a civil action against James McDermott Jr., the former chairman and chief executive of Wall Street investment banking firm Keefe, Bruyette & Woods Inc., for illegal insider trading. It alleges that McDermott tipped his mistress Kathryn Gannon, better known to some as Marilyn Star, of impending bank merger deals from June 1997 to April 1998. Gannon is accused of passing the tips on to a friend, Anthony Pomponio.
According to the SEC, Gannon and Pomponio made trading profits of $88,135 and $86,378 respectively by acting on the tips of possible mergers in little-known regional banks. Each of the banks was in merger talks or actually consummated deals. In all but one of the deals Keefe, Bruyette was associated with the transaction .
The SEC is seeking disgorgement of all ill-gotten gains, prejudgment interest, civil monetary penalties and a permanent cease and desist order. Concurrently the U.S. Attorney has also filed charges against all three defendants, two felony counts each for violations of the federal securities laws, and an additional felony count against Pomponio for perjury. McDermott and Pomponio have been arrested and charged. Gannon remains at large. An arrest warrant was issued for her.