Dead man among four accused of insider trading in G-P sale

The U.S. Securities and Exchange Commission on Tuesday filed an insider trading complaint against four men it said illegally profited from the 2005 sale of Georgia-Pacific Corp. to Koch Industries Inc.

One of those men — who died last month — acted on information he received from his brother, a member on G-P’s board, according to a 19-page complaint filed in the U.S. District Court in Chicago. The defendants are James D. Zeglis, Gautam Gupta, Lance D. McKee and Jim W. Dixon.

Zeglis’ brother, John, was a telecom executive who sat on the Georgia-Pacific board, the complaint said. John Zeglis is not named in the suit.

But James Zeglis’ attorney, Kevin M. Flynn, said his client died three weeks ago.

“Of course if they had called me, I would have told them that Mr. Zeglis passed away,” Flynn said. “Jim denied any wrongdoing. I had a meeting with the SEC several months ago and told them I didn’t think that they had a case against us. Maybe Mr. Zeglis gets the last laugh on that.”

Katherine Addleman, the SEC’s Atlanta regional director, said Tuesday the agency was unaware of Zeglis’ death but could still pursue his assets.

The complaint says that Zeglis received insider information from his brother about the Koch-Georgia-Pacific deal and tipped off Gupta and Dixon, both of whom purchased Georgia-Pacific shares. Gupta tipped off McKee who bought shares as well. The government said Gupta, Dixon and McKee made profits of $689,401, $116,000 and $7,157.60, respectively. Dixon allegedly gave James Zeglis $25,000 in kickbacks from his profit, according to the suit.

Gupta’s, Dixon’s and McKee’s attorneys did not return telephone calls seeking comment Tuesday.