Risk & Compliance

‘Life Coach’ Accused of P.F. Chang’s Insider Trading

An executive coaching consultant with Panda Restaurant Group is charged with leaking information to friends about a possible takeover of P.F. Chang's.
Matthew HellerSeptember 24, 2015

A “life coach” who worked for Panda Restaurant Group has been charged with tipping off friends to a possible acquisition of P.F. Chang’s China Bistro as part of an insider trading scheme that generated more than $300,000 in illicit profits.

In a civil complaint filed Wednesday, the U.S. Securities and Exchange Commission says Richard G. Condon, 66, learned from Panda management that the company was working to acquire P.F. Chang’s in a deal code-named “Project Potsticker.” He allegedly shared that information with two friends — Jonathan Ross and reality TV producer Howard Schultz — who then bought P.F. Chang’s call options.

Panda’s bid for P.F. Chang’s was unsuccessful but according to the SEC, Ross and Schultz sold their options immediately after a $1.1 billion takeover by a private equity firm was announced in May 2012, realizing $58,281 and $231,447 in illicit profits, respectively.

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The complaint also names Ross, 53, as a defendant. Schultz, whose shows included VH1’s “Dating Naked,” died in December.

Ali Sagheb, a friend of Ross, allegedly made $17,994 by trading in parallel with him. He has agreed to pay the SEC $19,829, representing his illicit profits plus interest.

“We allege that Condon exploited his position as Panda’s trusted consultant and confidant to provide his friends with nonpublic information that gave them an unfair advantage in the marketplace,” Michele Wein Layne, director of the SEC’s Los Angeles regional office, said in a news release.

According to the SEC, Condon began working for Panda as an executive coaching consultant in July 2011, conducting individual sessions for both of its co-CEOs. He allegedly first learned of “Project Potsticker” at senior team meetings he attended in August 2011.

Acting on Condon’s tips, Ross and Schultz allegedly purchased P.F. Chang’s call options in April 2012 with a $45 per share strike price. After the company announced it was being acquired by Centerbridge Partners for $51.50 a share, the stock price jumped 25%.

“[T]he sequence of contacts and trading by Ross, Schultz, and Sagheb in spring 2012 demonstrates that Condon tipped Ross and Schultz material nonpublic information about the potential acquisition of P.F. Chang’s … that Ross and Schultz both traded on the basis of that information[,] and that Ross caused Sagheb to trade in parallel with him,” the SEC said.