The U.S. Securities & Exchange Commission says Christopher Saridakis tipped friends and relatives to buy GSI Commerce stock ahead of its acquisition by eBay in 2011. Saridakis reached a financial settlement with the SEC, but now faces separate criminal charges in federal court. He resigned from eBay Enterprise in January.
Allison Enright , Editor
The U.S. Securities & Exchange Commission filed a civil complaint today charging the former president of eBay Enterprise, Christopher Saridakis, with insider trading for tipping his friends and family to the impending purchase of GSI Commerce by eBay Inc. and encouraging them to buy GSI shares.
In a separate filing in the same federal court in Philadelphia, U.S. Attorney Zane D. Memeger for the Eastern District of Pennsylvania filed criminal charges of securities fraud against Saridakis. If convicted Saridakis faces a maximum sentence of 20 years in prison, three years of supervised release, a $5 million fine, and a $100 special assessment, the U.S. Attorney’s office says.
EBay bought GSI Commerce in 2011 for approximately $2.4 billion, renaming it eBay Enterprise last year. At the time of the purchase, Saridakis was CEO of GSI’s Global Marketing Services division, and eBay appointed him president of the GSI Commerce division when the sale closed. Saridakis resigned from eBay Enterprise in January, at the time citing “personal reasons.” Tobias Hartmann is eBay Enterprise’s interim president.
The SEC filed the charges today against Saridakis and Jules Gardner, who court papers describe as a longtime friend of Saridakis, in the U.S. District Court for the Eastern District of Pennsylvania. It also announced that Saridakis had agreed to pay $644,822, which the SEC says is equal to twice the amount of the profits made illegally by the people he tipped—and those they subsequently tipped—to buy GSI stock. Saridakis also cannot serve as an officer or director of a public company under the terms of the settlement.
Saridakis was not charged with profiting from the sale directly. The SEC says he told two family members and two friends about the coming sale of GSI, a publicly traded company, to eBay; that was information not publicly available and put him in breach of his duty to GSI and its shareholders. The closing price of GSI stock increased more than 50% the day eBay announced the deal.
Among the evidence included in the complaint are text messages from March 2011 between Saridakis and Gardner in which Saridakis says Gardner should own GSI shares—and soon. Gardner paid nearly $471,000 for 25,000 shares two days later; he’d never owned GSI stock before. The SEC says Gardner has agreed to turn over the $259,054 profit he made as a result. Gardner also shared Saridakis’ tip with two friends, who also bought shares. The SEC says those individuals have also agreed to pay to settle the charges. The SEC says the five traders and a further individual involved in the case will pay a combined total of more than $490,000 in settlements.
“Although Saridakis’ tips spun a web of illegal trading, some of the downstream tippees substantially assisted in our investigation while others hindered it,” says Andrew J. Ceresney, director of the SEC’s Division of Enforcement, in a statement, noting those that didn’t cooperate with the investigation faced increased penalties.
An eBay Inc. spokeswoman today declined to comment on the case, saying it relates to transactions that took place before Saridakis joined eBay.
GSI Commerce was based in Pennsylvania and provided technology and services to numerous Top 500 e-retailers. Dozens of e-retailers ranked in Internet Retailer’s 2014 Top 500 Guide cite eBay Enterprise as a vendor, although the services provided by eBay Enterprise are much broader now than when eBay Inc. acquired GSI in 2011.