SEC v. Alfred V. Tobia, Jr., Elizabeth Lee — U.S. Securities and Exchange Commission Litigation Release No. 26218, dated January 13, 2025.
The SEC charged Alfred V. Tobia, Jr., a former public company officer, and his sister-in-law, Elizabeth Lee, with insider trading. Tobia allegedly tipped Lee about two upcoming corporate transactions, resulting in over $428,000 in illegal profits for Lee. Both defendants have agreed to settle the charges, with Tobia facing an officer and director bar and significant penalties, and Lee also agreeing to pay penalties.
In Plain English
Imagine you know a secret about a company before anyone else does. This case is about someone who knew two such secrets. He told his sister-in-law, who then bought stock in those companies right before the good news became public. When the news came out, the stock price went up, and she sold her shares for a big profit. The SEC found out and charged them both.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Tobia Learns of PFSWeb Sale On June 24, 2021, Alfred Tobia, while on a call as a Director of Company B, learned from a PFSWeb director that PFSWeb was planning to sell its LiveArea business unit. This information was not public.
- Tobia Tipped Lee Less than an hour after learning about the PFSWeb sale, Tobia called his sister-in-law, Elizabeth Lee. Fourteen minutes after this call, Lee began buying shares of PFSWeb in her own account and her parents' account.
- Lee Buys PFSWeb Shares Between June 24 and July 2, 2021, Lee purchased over 60,000 shares of PFSWeb for more than $455,000, using the nonpublic information from Tobia.
- PFSWeb Announces Sale On July 6, 2021, PFSWeb publicly announced the sale of its LiveArea business. The company's stock price immediately jumped by approximately 43%.
- Lee Sells PFSWeb Shares About 90 minutes after the announcement, Lee sold all her PFSWeb shares, making over $165,000 in profit from this trade.
- Tobia Learns of Spok Acquisition Plan In August 2021, Tobia, as President and CIO of Company A, was involved in discussions about Company A making an offer to acquire Spok Holdings Inc. He received a draft acquisition proposal letter on August 11, 2021.
- Tobia Tipped Lee Again The next morning, August 12, 2021, Tobia called Lee. Shortly after their call, Lee began purchasing shares of Spok in both her own and her parents' accounts.
- Lee Buys Spok Shares Between August 12 and August 16, 2021, Lee bought a total of over 127,000 shares of Spok for more than $952,000, using the nonpublic information from Tobia.
- Spok Acquisition Disclosed On August 30, 2021, Company A announced it had acquired 6.5% of Spok's shares and proposed acquiring the rest. Spok's stock price rose about 26% on the news.
- Lee Sells Spok Shares Lee sold all her Spok shares on August 31 and September 1, 2021, realizing over $262,000 in profit from this second insider trading scheme.
The Enforcement Action
On January 13, 2025, the SEC charged Alfred V. Tobia, Jr. and Elizabeth Lee with insider trading. Tobia, a former president and CIO of a public company and board member of another, allegedly tipped Lee about two corporate transactions. Lee traded on this information, generating over $428,000 in illegal profits. Tobia and Lee agreed to settle the charges. Tobia will be barred from serving as an officer or director of a public company for five years and will pay a civil penalty of $785,020. Lee will pay a civil penalty of $576,955. The total settlement amount is over $1.36 million. The SEC's complaint was filed in the U.S. District Court for the Southern District of New York.
Named in this action: Alfred V. Tobia, Jr., Elizabeth Lee.