It was the inside tip that kept on giving — and giving and giving.
A former tech executive was hit with criminal and civil charges for tipping friends and family about eBay’s planned takeover of the company where he worked.
Chris Saridakis, 45, who was then the head of a marketing division at GSI Commerce, encouraged two relatives and two friends to trade on the tip, leading to more than $300,000 of illegal profits, the Securities and Exchange Commission said in its complaint on Friday.
His pals then turned around and told four more people, who then told five more people — four of whom learned of the deal during a group dinner, the SEC said.
Four more people, including a New York hair salon owner, learned of the $2.4 billion takeover from another GSI insider who was not named in the SEC complaint.
Oded Gabay, who owns the Lovella West salon on the Upper West Side, allegedly learned of the merger from his wife, who heard it from a friend who was married to the second GSI insider, the SEC said.
In all, advance word of the deal reached 17 people across six states over eight days. Of those, 13 traded on it for profits totaling $738,635, according to the SEC, which said it is still investigating.
GSI saw its stock soar 50 percent on the day the deal was officially announced in March 2011. The company, based in King of Prussia, Pa., was renamed eBay Enterprises, where Saridakis worked as an executive until he abruptly resigned early this year.
“Although Saridakis’ tips spun a web of illegal trading, some of the downstream tippees substantially assisted in our investigation while others hindered it,” said Andrew J. Ceresney, director of the SEC’s enforcement division.
Saridakis, of Greenville, Del., has agreed to pay $664,822 to settle the SEC’s civil suit. He has also been barred from acting as an officer or director of a publicly traded company. Gabay also settled with the SEC for $47,000.
Saridakis is also expected to plead guilty to criminal charges in a parallel action brought by the US Attorney’s office for the Eastern District of Pennsylvania. He faces a maximum possible sentence of 20 years.
So far, the SEC has filed charges against five other traders and entered into a non-prosecution agreement with another.
“Chris accepts full responsibility for his conduct in this matter and has done everything he can to make the situation right,” said Saridakis’ lawyer Richard Zack.