Columnist Calandra in $540,000 SEC Settlement

Updated from 2:12 p.m. EST

Thom Calandra agreed to pay $545,000 Monday to settle charges he used his old newsletter at MarketWatch.com ( MKTW) to pump stocks he owned before selling them, the Securities and Exchange Commission said.

Calandra resigned from the popular financial news Web site last January amid allegations that the SEC was looking into his trading activity. Calandra was a senior columnist and a founding editor of MarketWatch.

The SEC alleged Monday that Calandra used his newsletter, The Calandra Report, "to bolster his personal trading profits." Regulators contend he wrote favorable stories about 23 small-cap stocks he owned and then sold the stocks after the shares rose in value.

The SEC says Calandra, 48, kept his readers in the dark about his trading activity and made inadequate disclosure regarding his financial interest in the companies.

"Calandra betrayed his readers' trust by surreptitiously using his newsletter, The Calandra Report, to bolster his personal trading profits," said Helane Morrison, district administrator of the SEC's San Francisco office. "Calandra's readers were entitled to know about his trading activity."

The SEC also alleged the columnist didn't disclose that he had received compensation from a stock promoter affiliated with two Canadian mining companies, Goldmaraca and IMC Ventures, he had touted in the newsletter. Calandra received heavily discounted shares in the two companies, which he "later sold at a substantial profit.''

Calandra, who was MarketWatch's first editor-in-chief, began publishing the newsletter in March 2003 at a $299 annual fee. At its peak, the product had 6,500 subscribers.

"I am happy to have finally reached a settlement with the SEC on this matter," Calandra said in a statement. "It has been a challenging year, to put it mildly, and I do not wish to expose my family to a protracted public dispute with the commission on this matter. Now that we have a resolution, I am eager to move on with my life and pursue my first love, writing."

In settling with the SEC, Calandra agreed to pay a $125,000 fine and give back $416,109 in trading profits. In one stock alone, Pacific Minerals, the SEC contends Calandra generated $53,000 in illegal profits.

Regulators said the relatively small penalty reflects "Calandra's cooperation with the staff's investigation." The former MarketWatch editor-in-chief neither admitted nor denied the allegations.

Dana Welch, Calandra's attorney, declined to comment.

MarketWatch is in the process of being acquired by Dow Jones ( DJ) for about half-a-billion dollars.

In April, MarketWatch disclosed that the SEC had subpoenaed the personal trading records of four top executives in conjunction with the Calandra inquiry. The subpoenas were sent to MarketWatch Chief Executive Larry Kramer, editor-in-chief David Callaway, Chief Technology Officer Jamie Thingelstad and Executive Vice President Bill Bishop.

A Marketwatch spokeswoman declined to comment about the earlier SEC request for the trading records. She referred to a statement in which the company said it "has cooperated fully with the SEC's investigation of Mr. Calandra." The company added: "This is a matter that is personal to Mr. Calandra, as a commentator who was required by Marketwatch's policies to disclose to Marketwatch users the trading of any instruments discussed in his columns."

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