A pair of former investment bankers are facing allegations of insider trading in connection with a pending acquisition that, regulators allege, resulted in more than US$18 million in illicit trading profits.
On Friday, the U.S. Securities and Exchange Commission (SEC) charged a pair of former investment bankers at at Bank of America Merrill Lynch — Gavin Wolfe and Jason Satsky — alleging that Wolfe traded in the stock of South Jersey Industries, Inc. (SJI), knowing that a possible acquisition involving the company was in the works.
None of the allegations have been proven.
According to the SEC’s complaint, Wolfe was tipped off by Satsky — who was then co-head of the power and renewables energy & utility group at BofA — about the potential acquisition of SJI by a private investment fund, a transaction that Satsky was working on for the bank.
The SEC alleges that Wolfe acquired at least US$53 million worth of SJI stock in November and December 2021, and generated US$18.5 million in illegal profits after the acquisition was announced in February 2022.
“The timing and circumstances of Wolfe’s trading demonstrate that he acted on information he received from Satsky,” the complaint said.
According to the SEC, BofA was hired by SJI to work on the deal on Sept. 29. It said that Wolfe and Satsky communicated multiple times after that, including attending a college basketball doubleheader together on Nov. 9, 2021, at Madison Square Garden — an event that’s central to the regulator’s allegations.
“By at least that time, Satsky knowingly or recklessly communicated material nonpublic information about South Jersey’s potential acquisition to Wolfe, breaching his duty of trust and confidence to [BofA], South Jersey and South Jersey’s shareholders,” the SEC alleged in its complaint.
The regulator alleged that Wolfe began acquiring SJI stock the day after they spent the evening together at MSG — where Kansas beat Michigan State, and Duke beat Kentucky.
In its complaint, the regulator alleged that, “Satsky tipped Wolfe … for his own personal benefit. The two men had a close friendship and a long history of exchanging favors, both personal and professional, that extended to their families.”
The pair had worked together at BofA for a number of years, where Wolfe was formerly managing director in the global energy and power group, before retiring from the bank in 2019 to manage his own investments. He owns and controls Evergreen Capital, and co-owns both Evergreen Financial and Empire with his wife — those companies are named as relief defendants in the case.
The SEC also alleged that Satsky misled the bank when it carried out an internal investigation into trading around the deal, and that Wolfe made false statements to the FBI when he was questioned about his trading.
In its complaint, which was filed in the U.S. district court for the Southern District of New York, the SEC is seeking permanent injunctions, monetary penalties and officer-and-director bans against Wolfe and Satsky, disgorgement from Wolfe and a conduct-based injunction against Satsky.