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Texting Lands eBay Exec in Hot Water for Alleged Insider Trading

A text-message exchange between a senior executive at GSI Commerce and his friend in 2011 before eBay acquired the company has been cited as evidence of insider trading in criminal charges filed by the government. eBay has since rebranded the company eBay Enterprise, where the executive, Chris Saridakis, served as President until January of this year.

The Securities and Exchange Commission (SEC) also alleged that Saridakis violated a duty of trust by providing two family members and two friends with nonpublic information about the pending acquisition of GSI Commerce and encouraged them to trade on it.

In a scenario that plays out like the old shampoo commercial, “she told two friends, and they told two friends and so on and so on,” the SEC alleged that Saridakis tipped off four people, some of whom tipped off their friends, and so on.

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Saridakis has settled with the SEC, but criminal charges are pending.

Prosecutors define insider trading as trading a security in violation of a fiduciary duty on the basis of material nonpublic information about a public company. In the criminal filing, prosecutors accuse Saridakis of tipping off a “cooperating witness” to buy GSI Commerce stock through a text-message exchange.

The SEC said its investigation also found that the wife of another insider at GSI became aware of the proposed acquisition and shared the news with a friend the weekend before the public announcement. That friend then shared the information with another, who then tipped his friend, and the two each proceeded to trade GSI stock the following Monday morning, according to the SEC.

The case is detailed on the SEC website.

The FBI also issued a press release about the case, writing, “The actions by Mr. Saridakis clearly violated the trust imparted on him by shareholders of GSIC,” and stating, “If convicted the defendant faces a maximum possible sentence of 20 years in prison, three years of supervised release, a $5 million fine, and a $100 special assessment.”

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Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. Send news tips to ina@ecommercebytes.com.


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