SEC's L.A. office taken to task by alleged insider trader

When the Securities and Exchange Commission files a complaint, the defendant almost always settles the case without admitting or denying guilt, and that's pretty much that. But Toby Scammell isn't about to meekly sign off on the allegations against him. You might recall that Scammell was the fellow alleged to have used secret information from his girlfriend to place option bets on Marvel Entertainment in advance of it being sold to Disney. The girlfriend was a Disney employee and worked on the deal. Well, Scammell says that the case against him is "riddled with omissions, distortions and inaccuracies" and that the SEC "is an incompetent government agency filled with bumbling lawyers who don't understand the first thing about the markets they're charged with regulating." That's quite a stretch, but then again, Scammell doesn't seem to be behaving very logically. I mean, why would anyone accused of insider trading rant this way in advance of an actual court date? (His lawyer declined comment.) That said, he does raise a legitimate question about the SEC suit. From DealBook:

The agency was unable to pinpoint exactly how Mr. Scammell learned of Disney's talks with Marvel. He either overheard his girlfriend's work conversations, viewed her confidential documents or otherwise picked it up from her, the S.E.C. posited in its complaint ... Without a smoking gun, the S.E.C. last week said it built a case on "circumstantial evidence," including the nature of Mr. Scammell's trades. He purchased call options with strike prices of $50 and $45, unusually high bets for a stock that never climbed above $42, the S.E.C. said. But Mr. Scammell said his trades were above board and consistent with his aggressive trading history. "I have years of history trading penny stocks and speculating on F.D.A. approvals, acquisitions, earnings calls and political events," he said.

This is clearly more than what the government lawyers had bargained for.

Earlier: Boyfriend of Disney staffer charged with insider trading