Illegal insider trading of Odyssey is alleged
A contractor settles the matter with the SEC.
By SCOTT BARANCIK, Times Staff Writer
Published January 18, 2008
A senior Odyssey Marine Exploration contractor credited with spotting the priceless "Black Swan" shipwreck last year engaged in illegal insider trading of the Tampa company's stock, federal regulators said Thursday.
Fort Lauderdale resident Ernie Tapanes, 39, allegedly began acquiring Odyssey stock via an E-Trade brokerage account last April, shortly after he discovered an anomaly on the ocean floor near Gibraltar.
By the time company executives publicly unveiled Odyssey's find in May - along with its haul of more than 500,000 silver and gold coins - Tapanes had secretly purchased 42,000 shares at a cost of roughly $150,000. He subsequently sold the shares for a $107,000 profit as Odyssey's stock price skyrocketed.
Tapanes, a Canadian citizen and native of Cuba who has worked closely with Odyssey since 2002, had signed a confidentiality and no-trading agreement the same day he began trading its stock. Under a consent deal with the Securities and Exchange Commission, he has agreed to relinquish his profit and pay an additional $107,000 penalty while neither admitting nor denying guilt.
No other Odyssey employees or contractors are under suspicion. "Our investigation is essentially concluded," Teresa Verges, an assistant director of the SEC's southeast region in Miami, said in an interview.
Odyssey executives distanced themselves from Tapanes on Thursday. In a written statement, the treasure-hunting company identified him as "one of many independent consultants" and "not a direct employee." But published accounts show that the quiet, cigar-smoking Tapanes has been an integral part of the company's success.
A book advertised on Odyssey's Web site, Lost Gold of the Republic, said Tapanes, an engineer, was in charge of Odyssey's first lucrative discovery, the wreck of the Civil War-era SS Republic, in 2003. Tapanes is credited with deciding to revisit the wreck site after a crew member dismissed it as "just a sailboat." He even was responsible for choosing Odyssey's 113-foot-long search vessel, having bought and then given it to the company in exchange for a chunk of stock. Odyssey co-founder Greg Stemm called him "one of the best hires the company ever made."
Last year, as Odyssey searched for the ship code-named "Black Swan," Tapanes was chief surveyor and the person who first spotted the wreckage. Company officials did not respond to an e-mail late Thursday as to Tapanes' current status with Odyssey.
Federal prosecutors could follow with criminal charges. But Peter Henning, a professor at the Wayne State University Law School in Detroit and former SEC enforcement official, said it is unlikely that Tapanes will be charged; the profit was relatively small, Tapanes has no apparent ties to the securities industry, and he cooperated. "You just can't do every case," Henning said.
Scott Barancik can be reached at email@example.com or (727) 893-8751.
[Last modified January 17, 2008, 22:41:29]
[an error occurred while processing this directive]