FBI insider trading probe results in criminal charge
The FBI has been conducting an insider trading investigation of the former chairman of Marathon Oil Corp., The Oklahoman has learned.
Dennis Reilley, 66, of Oklahoma City, was replaced as chairman Feb. 1. He served almost six years in that position with the Houston-based oil and natural gas exploration and production company.
The investigation has focused on whether insider information was provided about the impending merger of a global medical supplies company, Covidien PLC, with its rival, Medtronic Inc. Reilley was a director at Covidien.
Medtronic announced in 2014 it was acquiring Covidien for $42.9 billion in cash and stock.
The investigation resulted Monday in the first criminal charge. Federal prosecutors in Oklahoma City charged Reilley's close friend and neighbor, John Kenneth “Ken” Davidson, with making a false statement to the FBI.
Davidson is accused in the felony charge of lying to an FBI special agent in October 2018 when he denied ever getting any non-public information from Reilley. Davidson, 67, plans to plead guilty, his attorney said.
“He has been a successful businessman in the oil industry all of his life,” defense attorney John Coyle said Tuesday. “He regrets this mistake, and he intends to do whatever he can to make this right.”
Davidson profited from his inside knowledge of the impending merger, Coyle confirmed.
In the charge against Davidson, prosecutors specifically allege Reilley — identified only by initials — provided “non-public information about public companies Marathon Oil, DowDuPont and Covidien.” Prosecutors allege he had the information “because of his position on those entities' board of directors.”
Reilley stepped down from the board of DowDupont Inc. on Dec. 31.
Reilley could not be
reached Tuesday for comment. An Oklahoma City attorney who is representing him also could not be reached for comment.
The maximum punishment for a federal false statement offense is five years in prison and a $250,000 fine.