Securities and Exchange Commission v. Mazzo

James Mazzo (defendant) and Doug DeCinces (defendants) were longtime friends who lived in the same gated community and belonged to the same country club. Mazzo was the chairman and chief executive officer of Advanced Medical Optics (AMO), a California-based medical-eye-products company. In October 2008, Mazzo became aware that the pharmaceutical company Abbott Laboratories would be acquiring AMO. Mazzo told DeCinces about the planned acquisition, even though Mazzo knew that the Abbott/AMO transaction was confidential and that Mazzo had a duty not to disclose the transaction. DeCinces took the confidential information he learned from Mazzo and made substantial purchases of AMO shares before the Abbott/AMO transaction was publicly announced. DeCinces also gave confidential information about the Abbott/AMO transaction to three traders (defendants) and DeCinces’s friends, Eddie Murray and David Parker (defendants), who purchased thousands of shares of AMO stock prior to the public announcement of the Abbott/AMO transaction and then sold the stock once the transaction had been publicly announced. The Securities and Exchange Commission (SEC) brought insider-trading charges against DeCinces, Mazzo, Murray, Parker, and the traders who had received the information from DeCinces. The SEC alleged that DeCinces and the three traders had made more than $1.7 million in illegal profits from the scheme, Murray had made roughly $235,000 in illegal profits, and Parker had made roughly $348,000 in illegal profits. DeCinces and the three traders agreed to pay over $3.3 million to settle with the SEC, and Murray agreed to pay $358,151 to settle with the SEC.