Elvis surely didn’t do it. But a self-serving butler will pay to make insider-trading charges go away.
Graham J. Lefford, a former butler to American Idol creator Robert Sillerman, has agreed to a $66,200 settlement in an insider-trading case. The Securities and Exchange Commission had charged Lefford with trading on information he allegedly obtained from faxes sent to Sillerman in 2004, when Sillerman was closing a deal to buy a stake in Elvis Presley’s estate.
According to the SEC’s complaint, Lefford, who managed Sillerman’s Southampton home, bought 5,000 shares in Sports Entertainment Enterprises Inc., his former employer’s company (now called CKX Inc.), just 12 minutes after the final signatures were faxed to finish the $100 million deal. Lefford usually operated the fax machine in the poolside office and would bring documents to Sillerman in the main house.
Once news of the Elvis deal became public, the share price for the company (then a penny stock) surged by 9,000 percent within two days. Lefford’s $600 investment became a profit of $48,525, according to the SEC complaint. The settlement dictates that Lefford, who neither admits nor denies the SEC’s allegations, relinquish $31,450 in trading profits from the deal and pay a penalty of $31,450, plus an additional $3,280 in interest.
Coincidentally, the SEC’s complaint against Lefford was filed on the same day (September 26, 2006) that SEC director of enforcement Linda Thomsen vowed to crack down on suspicious trading. “The real challenge is to establish that a particular individual was in possession of material non-public information and in fact traded on it in breach of a duty, and to establish those facts based on admissible evidence that can withstand challenge at trial,” testified Thomsen to the Senate Judiciary Committee.
In the Lefford case, the butler had signed a confidentiality agreement that prohibited him from using any information obtained during his work at this house for his private benefit. However, since the case will not go to trial, it will remain a mystery if Lefford, in fact, did it.