Insider Trading

December 12, 2019

Two oil and gas executives have settled insider trading charges with the SEC by agreeing to pay nearly $6 million in civil penalty, disgorgement, and prejudgment interest.  The two, John Davidson and John Special, allegedly purchased shares of medical device company, Covidien PLC, upon learning non-public information about a potential merger with Medtronic PLC.  When news of the merger was officially released, investment accounts controlled by the men earned over $1 million in illicit gains.  SEC

December 9, 2019

Former U.S. Representative Christopher Collins, his son Cameron Collins, and the father of Cameron Collins’ former girlfriend, Stephen Zarsky, have settled insider trading charges with the SEC.  While serving on the board of Australian biotech company Innate Immunotherapeutics Ltd., the elder Collins learned about the impending release of negative test results for a multiple sclerosis drug.  His subsequent disclosure to his son, and his son’s disclosure to Zarsky, led the three to sell $700,000 worth of Innate shares before news hit the market.  Defendants will disgorge approximately $700,000, and have pleaded guilty to related criminal charges.  SEC

October 1, 2019

Matthew D. Webb of Houston, Texas, and his employer, broker Classic Energy LLC, will pay over $1.5 million to resolve charges that Webb used material, nonpublic information from Classic customers to make trades in Webb's proprietary trading account.  In addition, Webb failed to disclose to Classic customers that he was acting not only as a broker, but also as a trading counterparty.  Classic Energy was also found to have multiple supervision and recordkeeping failures.  CFTC

July 18, 2018

After being charged in March 2018, former Equifax executive Jun Ying has agreed to pay disgorgement and prejudgment interest totaling $125,636 to resolve charges that he engaged in insider trading ahead of exposure of Equifax's data breach. Ying's payment obligation will be offset by the $117,117 forfeiture that he has already paid in the parallel criminal case.  SEC

May 7, 2019

The SEC has tentatively settled insider trading charges with a Nevada man who allegedly engaged in prohibited insider trading after he peeked at confidential details of a possible acquisition by Cintas Corporation while at the home of Cintas’s general counsel, a lifelong friend. Armed with information about the company’s plan to acquire G&K Services, Brian Fettner purchased G&K stock through his ex-wife and ex-girlfriend’s brokerage accounts, then persuaded both a third love interest and his father to purchase G&K stock on their own. When the merger was publicly announced in August 2016, accounts associated with Fettner netted profits exceeding $250,000. Fettner is expected to pay a penalty of $252,995, and his ex-wife and ex-girlfriend is expected to disgorge of their illicit gains. SEC

February 20, 2019

Following charges in 2017, two individuals have been sentenced for their roles in an insider trading scheme that used information from co-conspirator Daniel Rivas, who was employed by an investment bank. Robert Rodriguez was sentenced to one year in prison and Michael Siva was sentenced to 18 months.  Rivas supplied his co-conspirators with information from the investment bank's deal tracking system about upcoming mergers and acquisitions before they were publicly announced.  Rodriguez, Siva, and others in their tipping chains then traded on the information, earning more than $5 million in illicit profits on more than two dozen securities.  USAO SDNY; USAO SDNY

January 31, 2019

Saleem Khan, of Dublin, pleaded guilty to conspiracy and securities fraud charges arising from an insider trading scheme in which he obtained and traded on material, non-public information. Khan admitted he obtained material, non-public information relating to the sales and financial performance of Ross Stores, Inc., a discount-clothing retailer then headquartered in Pleasanton, Calif., from a friend who worked in Ross’s finance department. Based on this material, non-public information, Khan entered into options contracts regarding Ross securities in advance of Ross’s monthly sales announcements. He admitted he provided pecuniary benefits to the Ross “tipper” and made profits in excess of $3,500,000 as a result of the scheme. DOJ

October 18, 2018

Michael Siva, a broker and financial advisor at a New York City investment bank, pleaded guilty to securities violations in connection with his role in an insider trading scheme in which Siva and co-defendants traded on material non-public information regarding potential and unannounced merger and acquisition transactions, including tender offers, which they obtained from a co-conspirator employed as a technology consultant at a different investment bank.  Siva and a co-defendant generated illicit profits in excess of $3 million on the trades, and Siva also earned thousands of dollars in commissions on the illegal trades entered on behalf of his clients. SDNY.  See also, August 2017 SEC Action.

October 16, 2018

Sudhakar Reddy Bonthu, a former manager at Equifax, was sentenced to 8 months of home confinement and fined $50,000 for insider trading related to Equifax's massive data breach in 2017. As a member of a team tasked with quickly developing an online user interface for 100 million possible victims of a data breach at an unnamed company, Bonthu quickly guessed that the company in question was the one he worked for. In violation of company policy as well as federal law, Bonthu then allegedly bought a large quantity of Equifax stock, specifically put options, which allowed him to profit if the value plummeted within a two week period. Six days later, Equifax announced the breach and its stock value plummeted, netting Bonthu more than $75,000 in fraudulently gained profits. USAO NDGA