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August 16, 2017

The Securities and Exchange Commission today 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. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today unsealed criminal charges against the same seven individuals. 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. SEC  See also, October 2018 guilty pleas.

July 12, 2017

The Securities and Exchange Commission today announced insider trading charges against a research scientist who allegedly searched the internet for “how sec detect unusual trade” before making a trade that the agency flagged as suspicious through data analysis. The SEC’s complaint alleges that Fei Yan loaded up on stocks and options in advance of two corporate acquisitions late last year based on confidential information obtained from his wife, an associate at a law firm that worked on the deals.  According to the SEC’s complaint, Yan made approximately $120,000 in illicit profits by selling his holdings in Mattress Firm Holding Corp. and Stillwater Mining Company following public announcements that they would be acquired by other companies. Yan allegedly attempted to conceal his illegal activity by placing the illicit trades in a brokerage account bearing the name of his mother, who lives in China.  Among the internet searches he conducted was “insider trading in an international account.” SEC

May 24, 2017

The Securities and Exchange Commission today announced charges in an alleged insider trading scheme involving tips of nonpublic information about government plans to cut Medicare reimbursement rates, which affected the stock prices of certain publicly traded medical providers or suppliers. The SEC’s complaint alleges that David Blaszczak, a former government employee turned political intelligence consultant, obtained key confidential details about upcoming decisions by the Centers for Medicare and Medicaid Services (CMS) from his close friend and former colleague at the agency, Christopher Worrall.  According to the SEC’s complaint, Worrall serves as a health insurance specialist in the Center for Medicare and tipped Blaszczak about at least three pending CMS decisions that affected the amount of money that companies receive from Medicare to provide services or products related to cancer treatments or kidney dialysis. SEC

May 11, 2017

The Securities and Exchange Commission today charged Walter C. Little a former partner at an international law firm and his neighbor Andrew M. Berke with making more than $1 million in illicit profits by insider trading around corporate announcements. The SEC alleges that Little accessed confidential documents on his law firm’s internal computer network related to at least 11 impending announcements involving law firm clients, none of which he personally advised or billed for services.  Little then allegedly traded in advance of each announcement and often tipped Berke with material nonpublic information so he could similarly trade in company stocks before the announcements were made publicly.  According to the SEC’s complaint, the insider trading occurred from February 2015 to February 2016. “As alleged in our complaint, Little used highly-confidential information about his law firm's clients to make more than $1 million for himself and his neighbor through illegal insider trading and tipping,” said Stephanie Avakian, Acting Director of the SEC’s Enforcement Division. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Little and Berke. SEC

March 24, 2017

Three Peruvian traders – Nino Coppero del Valle, Julio Antonio Castro Roca, and Ricardo Carrion – will collectively pay over $297,000 (equal to full disgorgement of profits plus interest and penalties) to settle allegations that they traded on nonpublic information prior to the merger of two mining companies. SEC

March 14, 2017

Silicon Valley-based auditor Nima Hedayati will pay more than $87,000 to settle charges that he traded on inside information about a client on the verge of a merger.  The SEC’s order found that through his work at an independent audit firm, Hedayati learned that Lam Research Corporation was making preparations to acquire KLA-Tencor Corporation, both companies involved in the manufacture of equipment used to create semiconductors.  According to the SEC’s order, Hedayati purchased out-of-the-money call options in KLA common stock in his and his fiancee’s brokerage accounts and encouraged his mother to purchase KLA common stock.  After merger plans were publicly announced, KLA’s stock price increased nearly 20 percent, and Hedayati and his mother collectively profited by more than $43,000 from the illegal trades. SEC

February 10, 2017

The SEC announced fraud charges against Shaohua (Michael) Yin for allegedly reaping more than $29 million in illegal profits based on insider trading in advance of the announcement of Comcast Corp.’s acquisition of DreamWorks Animation SKG in April 2016.  The SEC also obtained an emergency court order freezing brokerage accounts alleged to contain these profits.  The SEC alleges that in the weeks leading up to the announcement, Yin amassed more than $56 million of DreamWorks stock in the U.S. brokerage accounts of five Chinese nationals, including his elderly parents.  DreamWorks stock price rose 47.3% once the acquisition was announced.  Yin, a partner at Summitview Capital Management Ltd., a Hong Kong-based private equity firm, allegedly did not trade in DreamWorks stock through his own account but instead traded through five accounts from addresses in Beijing and Palo Alto and on a computer that was also used to access Yin’s email accounts.  SEC

December 5, 2016

The SEC announced insider trading charges against San Francisco-based information technology specialist Jonathan Ly.  Ly, a technology specialists with online travel company Expedia, allegedly hacked senior executives at his company and illegally traded on company secrets, generating nearly $350,000 in profits on trades undertaken between 2013 and 2016.  According to the SEC’s complaint, Ly exploited administrative access privileges to remotely hack into computers and email accounts of senior executives and review confidential documents and pre-earnings reports.  Ly targeted information prepared by Expedia’s head of investor relations which summarized Expedia’s yet-to-be-announced earnings reports and described how the market could react to particular announcements.  Ly allegedly used this nonpublic information to make highly profitable trades in Expedia securities in advance of the announcements.  Ly has agreed to pay more than $375,000 to settle the SEC’s charges.  SEC

October 21, 2016

The SEC charged Tennessee-based lawyer James C. Cope with insider trading based on information he obtained through his position on the Board of Directors at Nashville-based Pinnacle Financial Partners.  The SEC alleges that Cope learned confidential details about Pinnacle’s planned merger with Avenue Financial Holdings prior to the banks’ joint public announcement of the merger.  During, and within an hour after, the board meeting at which Cope learned the details of the merger, he placed five orders for securities in Avenue Financial.  Cope allegedly made more than $56,000 through these purchases.  SEC

October 13, 2016

San Francisco-based hedge fund advisory firm Artis Capital Management will pay about $8.9 million to settle charges of failing to maintain adequate policies and procedures to prevent insider trading at the firm.  Artis failed to respond appropriately to red flags that should have alerted it to misconduct by employee Matthew Teeple.  Teeple’s supervisor, Michael W. Harden, will pay $130,000 and is suspended from the securities industry for 12 months for his role in the misconduct.  SEC
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