By Childs Walker, The Baltimore Sun
3:03 PM AKDT, June 21, 2012
The stock purchases began in December 2008, less than two months after discussions kicked off about the corporate acquisition of a California medical products manufacturer.
By the time the deal was announced on Jan. 12, 2009, former Orioles third baseman Doug DeCinces had bought 83,700 shares in the company, Advanced Medical Optics Inc. The stock's value soared 143 percent on news of the $2.8 billion acquisition, and DeCinces quickly sold his shares for a profit of $1,282,691.
Three of DeCinces' friends and business associates also sold recently acquired shares of Advanced Medical Optics for a profit of $430,000.
Securities and Exchange Commission court filings lay out a detailed timeline of the personal connections that led to insider trading accusations against DeCinces and the three others. And now another former Oriole — Hall of Famer Eddie Murray — has been linked to the ongoing probe, part of a sprawling New York investigation that has produced charges against dozens of Wall Street traders and consultants.
Murray has not been charged with a crime, and his name does not appear in the SEC court filing against DeCinces or in other documents related to the investigation. A 2010 report from the Los Angeles Daily Journal said Murray was one of several investors believed to have been tipped off by DeCinces, but he was not among the three associates targeted in the 2011 SEC suit. This week, a Reuters report said Murray remains a subject of the probe.
Murray's lawyer has downplayed the matter as "old news," and the nature of his alleged involvement remains unclear.
DeCinces paid $2.5 million last year to settle the civil case without acknowledging guilt. His three associates, who include the president of a Sparks-based banking supply company, also agreed to settlements totaling $830,000.
A voicemail message at DeCinces' Irvine, Calif., development company said he is out of the office until July 3. An associate in his office did not respond to a request for comment, nor did Rick Firestone, the Washington-based attorney who defended the former Oriole.
Attempts to reach Murray through Diane Hock, a lawyer who represents him in marketing ventures, were unsuccessful.
Speaking about the DeCinces case, a top SEC enforcement official said there's always a puzzling element to insider-trading allegations involving public figures.
"It's hard to understand why reputable people, especially those with money, put their reputations at stake," said Daniel M. Hawke, chief of the agency's market abuse division.
Other prominent people who have faced insider trading charges include Martha Stewart, who served five months in prison for obstructing an investigation of her stock activities, and 1980s junk-bond innovator Michael Milken, who paid more than $1 billion to settle several cases.
Last year, hedge-fund billionaire Raj Rajaratnam was sentenced to 11 years in prison for insider trading as a result of the same investigation that spawned the DeCinces case. A California attorney, Dean Goetz, agreed to pay $23,000 last year to settle charges that he traded on inside information about Advanced Medical Optics.
Hawke said he could not comment on the report involving Murray and could only say an investigation is continuing, as noted in a 2011 release announcing the settlement with DeCinces.
SEC civil cases are generally based on circumstantial evidence, so there is often a gray area in determining how a stock trader acquired and used information, the agency says. Many cases fail to move forward because investigators lack specific evidence linking trades to insider information, even if the trades seem suspicious.
Abba Poliakoff, an attorney at Gordon Feinblatt with expertise in securities law, said the key is establishing that an investor knowingly trades on the basis of nonpublic information.
"In all the cases you read about, there's usually a well-established trail you can follow that shows the person knew it was an inside tip," Poliakoff said.
Casual stock advice between friends is not enough to run afoul of the law, he said.
As unclear as Murray's reported link remains, SEC court filings lay out DeCinces' alleged actions in precise detail.
The trail began on Oct. 13, 2008, when an investment banker contacted Illinois-based Abbott Laboratories Inc. to gauge the medical research company's interest in buying Advanced Medical Optics, according to the court documents. Formal discussions of a merger began about a week later and intensified over the following month. On Nov. 26, 2008, Abbott informed officers at Advanced Medical Optics that a purchase offer would be forthcoming.
At that point, the SEC alleged, someone familiar with the negotiations told DeCinces of the impending transaction. He bought 3,000 shares of Advanced Medical Optics on Dec.1, the same day Abbott submitted its preliminary proposal to buy the company's remaining stock.
The civil suit says DeCinces, 61, "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.
DeCinces bought another 5,000 shares the next day and 4,000 more on Dec. 10, the SEC said. On Dec. 15, he purchased 14,000 shares, using $160,000 he had liquidated by selling a portfolio of stocks, some held since 2001. Such transactions, using funds from longtime investments to finance a sudden bet on a company about to be sold, are viewed as red flags by SEC investigators.
DeCinces continued to buy shares as the deal moved to completion, using accounts set up for his grandchildren to make some of the purchases.
Meanwhile, DeCinces' former physical therapist, Joseph Donohue of Trabuco Canyon, Calif., purchased 5,000 shares of Advanced Medical Optics in December and January transactions, the SEC said.
Fred Jackson, a real estate lawyer from Newport Beach, Calif., who knew DeCinces socially, also bought 11,000 shares, four days before the sale announcement. The SEC alleged that he made an initial stock purchase on his mobile handheld device while having breakfast with DeCinces on Jan. 8.
The same day, Roger Wittenbach, described by the SEC as an old DeCinces friend from Lutherville, bought 15,000 shares. The SEC said he also urged his sister to buy 1,000 shares.
The SEC said the three men acted on tips from DeCinces, knowing that the information about the merger was not meant to be public. All three sold their stock after the transaction, earning profits ranging from $75,570 for Donohue to $201,692 for Wittenbach, who runs Wittenbach Business Systems, a banking and security equipment company based in Sparks.
Wittenbach did not respond to calls and e-mails seeking comment.
In Baltimore, DeCinces was best known as the unlucky soul who had to follow Brooks Robinson at third base, though he became an excellent player in his own right. "It's the single thing I'm most proud of," he said in a 2006 interview. "Surviving that and going on to have my own career. … It was an honor to do it honestly."
His game-winning home run in a June 22, 1979, game at Memorial Stadium is often cited as the first blow in the wave of "Oriole Magic" that carried the club through the early 1980s.
Murray was the superstar on those teams.
DeCinces has lived in Southern California and worked as a developer of golf courses and other properties for most of his post-playing career.
"Baseball gave me a great opportunity to be able to walk through a lot of doors," DeCinces told the web site Mlb.com for a 2008 article about his business career. "But it's what you do in your preparation, whether you'll be able to walk through that door a second time. People don't really understand what it takes to be a professional athlete. It takes a lot of dedication and preparation in order to be successful and I took those traits and went to the business world with that same preparation."
Baltimore Sun reporter Chris Korman contributed to this article.