William Mays, in addition to being the founder and CEO of Mays Chemical Co., the City's largest minority-owned business, also serves as a director of Indiana Energy Company and health care giant Wellpoint. He also owns the Indianapolis Recorder, Indianapolis' only minority-owned newspaper. Mays, you may recall, was also one of the principal investors in the controversial 300 East restaurant/bar in the Julia Carson Government Center. He has close ties to Ice Miller's Lacy Johnson, another investor in 300 East.
Three area investors have settled an insider-trading case involving shares of First Indiana Corp. they purchased in 2007, shortly before the bank's shares soared on news of a coming acquisition.
According to the Securities and Exchange Commission, Nancy Jewell, Matthew B. Murphy III and Kristin Mays bought the shares after a member of the board of directors of First Indiana complained on Friday, July 6, 2007, about having to attend a special First Indiana board meeting on Sunday because it would ruin his plans for the day.
The SEC said the board member had a longstanding history of sharing "confidences" with the three. "Based upon this information, which they misappropriated from the Director, each of the defendants purchased First Indiana common stock on the afternoon of (Friday) July 6, 2007," according to the SEC's complaint.
The following Monday, Milwaukee-based Marshall & Ilsley announced it would acquire First Indiana. News of the deal sent First Indiana shares soaring by about 42 percent above the bank's closing stock price the Friday before.
For the settlement, the three returned their gains and paid interest and a penalty equal to their gains. Jewell, Indianapolis, paid $18,720. Murphy, Indianapolis, paid $19,120 and Mays, McCordsville, paid $16,765.
The three settled with the SEC without admitting or denying the allegations.
The SEC settlement does not identify the First Indiana board member who complained about attending the meeting. However, the document does identify Kristin Mays as the daughter of the director and the assistant to the president of the privately held company owned by the director.
Jewell had been a longtime friend of the director's and a property manager for some of his outside business dealings, according to the SEC. Murphy and the director had been partners in a real estate venture.
William Mays, president of Mays Chemical Co., was a director at First Indiana in 2007, according to First Indiana's proxy filed that year. William Mays did not immediately return a phone call to his office seeking comment Monday evening.
UPDATE: The IBJ's Greg Andrews has more on this developing story, including comments from Bill Mays, who suggests there were many people being probed besides the three named in the SEC settlement agreement. Mays tells Andrews the list of the investigated reads like a "Who's Who" of Indianapolis, making this settlement agreement look more like a coverup than appropriate justice being meted out by our government:
The insider-trading settlements announced by the Securities and Exchange Commission this week were an outgrowth of a broader inquiry into trading in First Indiana Corp. by dozens of people before its sale two years ago, according to a former director of the bank.
“They had an SEC inquiry into, I’ll use the term ‘excessive trading,’ in the stock by a whole bunch of people — it might be 100,” said Bill Mays, a First Indiana director from 2003 until the bank’s $529 million sale to Milwaukee-based Marshall & Ilsley Corp. “You would be shocked by the number of people,” according to Mays, who said he was asked by investigators to identify people he knew on the list. “It reads like a who’s who of Indianapolis.”
Mays, owner of Mays Chemical Co., said the investigation seemed like a questionable use of SEC resources. He said the total dollar value of the trading by those on the list was less than $1 million. Those who executed trades pocketed a handsome return. The per-share price paid by M&I was 42 percent higher than the price at which First Indiana shares closed the prior trading day.
It’s not clear whether the $51,852 in settlements announced yesterday with three local residents — all of whom are close to Mays — wraps up the the inquiry. Officials with M&I and the SEC could not be reached this morning.
According to the SEC, all three individuals bought First Indiana shares the same day that a First Indiana board member complained to them about having to attend a special Sunday board meeting. The M&I deal was announced the following Monday morning.
SEC records do not accuse the director of impropriety, and he is not identified by name in court records. However, the description in court papers matches only one director —Mays — and he acknowledged to IBJ that he did complain.
Furthermore, one of the settling parties is Mays’ daughter, Kristen, 33, who serves as assistant to the president of Mays Chemical, and another is Matthew B. Murphy III, 51, the company’s director of finance and administration. The other person settling is Nancy Jewell, 52, CEO of Indiana Minority Health Coalition. Without admitting or denying allegations of wrongdoing, all three agreed to return the amount of their profits, plus pay an equal amount as a penalty. That totaled $15,920 for Mays, $18,156 for Murphy and $17,776 for Jewell.
According to the SEC, the director complained to all three that the special meeting was “ruining his scheduled plans for the day.”
Kristen Mays, Murphy and Jewell “then each misappropriated that information,” the SEC alleges.