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SEC Uncovers Wide-Reaching Insider Trading Scheme

Posted  August 18, 2017

By the C|C Whistleblower Lawyer Team

The SEC announced insider trading charges against seven individuals who generated millions in profits by trading on confidential information about dozens of impending mergers and acquisitions.  Data analysis allowed the SEC’s enforcement staff to uncover the illicit trading despite the traders’ alleged use of shell companies, code words, and an encrypted, self-destructing messaging application to evade detection.

According to the SEC’s complaint, Daniel Rivas, a former IT employee of a large bank, was at the center of the alleged scheme, misusing his access to a bank computer system to tip four individuals who traded on the information.  The SEC’s complaint alleges several trading rings stemming from Rivas’s tips.  In the first ring, Rivas frequently tipped his girlfriend’s father, James Moodhe, who traded on the information and used coded conversations and in-person meetings to relay the tips to his friend, Michael Siva, a financial advisor at a brokerage firm.  Siva allegedly used the confidential information to make profitable trades for his brokerage firm clients, earning commissions for himself in the process, and he passed numerous tips along to a client who traded on them.  The complaint alleges that Siva also traded on behalf of himself and his wife based on two of the tips he got from Moodhe, a former financial services company treasurer.

According to the SEC’s complaint, two other trading rings involved two of Rivas’s friends in Florida, Roberto Rodriguez and Rodolfo Sablon, who discussed tips on an encrypted, self-destructing smartphone messaging application and used shell companies to carry out their insider trading.  Although Rodriguez and Sablon were inexperienced traders, in just over a year they turned less than $100,000 into more than $2 million in profits by making aggressive options trades based on the confidential information.  A third trading ring allegedly involved Jhonatan Zoquier, another inexperienced trader who profited by trading on inside information communicated through the encrypted messaging application.

“The tippers and traders in this case are alleged to have used various methods to try to cover their tracks, but their efforts failed,” said Steven Peikin, Co-Director of the SEC Enforcement Division.  “These charges reflect our continued use of sophisticated tools to detect and root out secretive and wide-reaching insider trading schemes.” SEC

Tagged in: Insider Trading, Securities Fraud,

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