Investor charged, settles in Delta Petroleum case

The owner of a Denver investment firm has agreed to pay nearly $900,000 to settle insider trading charges by the Securities and Exchange Commission in connection with transactions involving the former Delta Petroleum.

The SEC said in a news release that it had charged Scott Reiman, 48, “a prominent Denver-based businessman,” Monday as part of an investigation that also has led to SEC charges against two other men.

The charges related to alleged trading based on inside information prior to Delta’s announcement that private investment firm Tracinda was buying $684 million in Delta stock.

Delta held oil and gas interests centered in the Collbran area. It eventually went through bankruptcy reorganization, changed its name to Par Petroleum Corp. last year and pooled its assets in Mesa and Garfield counties with Laramie Energy II in a joint venture.

The SEC previously had accused Robert Parker, the former chief executive officer of Delta, and Denver insurance executive and close friend to Parker, Michael Van Gilder, in the case. The agency contends Parker tipped off Van Gilder and Reiman as he was communicating with Tracinda, owned by billionaire Kirk Kerkorian, while it was considering buying a 35 percent stake in the company.

The SEC said Reiman bought Delta stocks or stock option contracts on three occasions based on tips from Parker, in one case acting within minutes after getting off the phone with Parker.

It said Tracinda eventually bought Delta shares in 2007 at a price 23 percent above Delta’s stock price at the time, and that Reiman benefited from a resulting jump of almost 20 percent in Delta’s stock price.

“Reiman took advantage of highly confidential information that he obtained through his friendship with Parker and traded on it for significant and entirely illegal profits,” Daniel M. Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit, said in a news release.

Under the settlement, Reiman agreed to pay the U.S. Treasury $398,000 for what the SEC calls “disgorgement” of ill-gotten gains, along with a $398,000 penalty and prejudgment interest of $93,567. Reiman neither admitted nor denied the charges, the agency said.

Reiman is the founder and president of the Denver-based investment firm Hexagon Inc. The settlement bars Reiman from the securities industry, with the right to apply for re-entry after five years. It also prohibits him from acting as an officer or director of any public company for five years.


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