Orioles Hall-of-Famer Eddie Murray has agreed to pay $358,151 to settle charges that he illegally profited from an insider trading scheme involving former teammate Doug DeCinces, the U.S. Securities and Exchange Commission announced Friday.
Murray, who was in Baltimore last weekend for the unveiling of a statue of him at Camden Yards, made $235,114 in illegal profits, according to the SEC charges. In paying the settlement, Murray, 56, neither admitted to nor denied the allegations.
He has declined comment on his connection to the case several times since his name was linked to the investigation in June.
“All one needs to do is read paragraph two of the settlement document to understand that Eddie Murray is admitting no wrongdoing at all in this matter,” said his Los Angeles attorney, Michael Proctor, in a statement. “Mr. Murray is an honorable man with a long record of honorable conduct. He has settled this to put the case to an end and get on with his life.”
SEC officials painted a different picture.
“It is truly disappointing when role models, particularly those who have achieved so much in their professional careers, give in to the temptation of easy money,” said Daniel M. Hawke, chief of the SEC’s market abuse unit.
“It’s a sad day,” Hawke added. “We did not undertake the case without recognition of Mr. Murray’s stature in Maryland. It’s one of those situations where we wish it wasn’t the case.”
DeCinces, a former Orioles third baseman, paid a $2.5 million fine last year to settle insider trading charges against him.
The SEC alleges that on Jan. 7, 2009, Murray used all of the cash in a self-directed brokerage account to purchase 17,000 shares of California-based Advanced Medical Optics, a company chaired by DeCinces’ neighbor. The SEC alleges that Murray, 56, sold all of the shares shortly after the company was purchased by Illinois-based Abbott Laboratories Inc. five days later.
The SEC also charged DeCinces’ Laguna Beach, Calif., neighbor, James V. Mazzo, alleging that the former chairman and CEO of Advanced Medical Optics was the source of insider tips that led to more than $2.4 million in illegal profits.
The agency’s U.S. District Court filing says Mazzo had repeated contact with DeCinces in the weeks leading up to the merger and that DeCinces passed information on the deal to a circle of friends, including Murray, who lives in Santa Clarita, Calif. Three others, including Baltimore County businessman Roger A. Wittenbach, also agreed to settlements with the SEC last year.
The SEC says DeCinces and Murray exchanged several phone calls on Jan. 5 and Jan. 6, 2009, shortly after DeCinces received an update on the deal at a dinner with Mazzo. After those calls, the agency’s complaint alleges, Murray placed two cell phone calls to his stock broker to order the purchase of Advanced Medical Optics stock.
SEC officials said the timing of the calls is strong circumstantial evidence of a classic insider trading scenario. The agency has faced periodic criticism for bringing cases against prominent people such as Martha Stewart. But Hawke said the cases arise organically from anomalies in trading data.
“We’re not trying to make an example out of people who are well-known because they’re well-known,” he said. “We’re making an example of them because of what they did.”
Murray agreed to pay $235,314, the equivalent of his alleged profits, a $117,657 penalty and $5,180 in pre-judgment interest.
“Based on the settlement terms, it appears that Murray concluded that paying a relatively modest fine and moving on was a better outcome than the uncertainty of protracted litigation, media scrutiny and substantial legal costs required to mount a defense in court,” said Dan Zelenko, a former SEC enforcement attorney and partner at Crowell & Moring LLP in New York.
The court filing says Mazzo and DeCinces were personal friends, and that Mazzo invested in a restaurant business run by the former Oriole’s son and paid for interior decorating services from DeCinces’ daughter. It also says Mazzo and Murray knew each other.
DeCinces, who has not commented on the case and could not be reached Friday afternoon, was accused of purchasing large chunks of Advanced Medical Options Stock in the two months before the company was purchased. He was accused of selling the stock for a profit of $1.39 million shortly after the deal was completed.
The civil suit against DeCinces said he, “knew or was reckless in not knowing” that he was trading on nonpublic information from a source who was not at liberty to share details of the corporate purchase.
Murray and DeCinces were stars of Orioles teams that contended annually in the late 1970s and early 1980s. DeCinces was the third baseman who replaced Brooks Robinson, Murray the slugging first baseman who played in seven All-Star Games and finished in the top five of MVP voting five times for the club.
Murray left town under bitter circumstances when he was traded to the Los Angeles Dodgers for a collection of lesser players in 1988 but returned to the Orioles in 1996, hitting his 500th home run at Camden Yards. He entered Cooperstown in 2003, one of just four major leaguers with 3,000 hits and 500 home runs.
The Orioles declined comment on Friday’s SEC announcement.
The normally taciturn Murray was visibly moved at the unveiling of his statue last Saturday, as a throng of fans around him chanted “Ed-die, Ed-die.”
“You knew it was coming,” Murray said of the moment. “You see it the other day. You look at it and you still get a little speechless.”
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