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Insider Trading

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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

In Their Own Words -- Ceresney

Posted  10/12/16

--  “This has been a strong year for the Enforcement Division, with groundbreaking insider trading and FCPA [Foreign Corrupt Practices Act] cases and other important actions across the full spectrum of the securities laws.”

Andrew J. Ceresney, Director of the SEC’s Enforcement Division, commenting on the agency’s enforcement activities over the past year.

September 29, 2016

The SEC charged Robert Gadimian, former Senior Director of Regulatory Affairs for Puma Biotechnology, with insider trading ahead of the company’s news announcement about its drug to treat breast cancer.  The SEC alleges that Gadimian pocketed more than $1.1 million in illicit profits by secretly purchasing Puma stock and short-term call options based on nonpublic information he learned about positive developments in two clinical trials for Puma’s drug, neratinib.  SEC

September 21, 2016

The SEC charged hedge fund manager Leon G. Cooperman and his firm Omega Advisors with insider trading.  The SEC alleges that Cooperman used his status as one of the largest shareholders in Atlas Pipeline Partners (APL) to gain access to a company executive and learn confidential details about the company’s planned sale of its natural gas processing facility in Elk City, Oklahoma.  Cooperman generated substantial illicit profits by purchasing securities in APL in advance of the sale.  When APL publicly announced the asset sale, its stock price jumped more than 31%.  SEC

August 11, 2016

The SEC charged stockbroker Paul T. Rampoldi and his friend William Scott Blythe III with insider trading.  Allegedly, an IT executive at pharmaceutical company Ardea Biosciences tipped one of the brokers at Rampoldi’s firm about a cancer drug licensing agreement and an acquisition by AstraZeneca before the company made public announcement of the deals.  The broker in turn tipped two other brokers at his firm, including Rampoldi, who told his friend Blythe.  To evade detection by the compliance department where Rampoldi worked, Blythe agreed to fund the purchase of Ardea call option contracts in a brokerage account he held at a different brokerage firm and divide the profits among the group.  The two other brokers and Ardea employee were charged previously.  SEC

August 4, 2016

The SEC charged Connecticut cardiologist Dr. Edward Kosinski with insider trading.  Dr. Kosinski was the principal investigator in a drug trial being pursued by Regado Biosciences for a potential new clotting agent designed to be used in patients undergoing coronary angioplasty.  Dr. Kosinski received advance notice that patient enrollment in the trial was being suspended because patients had experienced severe allergic reactions.  In response, he allegedly sold all 40,000 shares of his Regado stock to avoid $160,000 in losses he would have suffered when the news became public and the stock dropped.  A month later, he received advance notice that enrollment would be halted because a patient had died, and he again profited by betting the stock price would drop and purchasing option trades.  SEC

August 16, 2016

Steven A. Cohen of Greenwich, Connecticut was issued a notice of intent to revoke, suspend or place restrictions on his registration by the CFTC for failing to adequately supervise an employee to ensure that employee was not engaged in insider trading.  CFTC

June 16, 2016

The SEC announced charges against Christopher Salis, former global vice president at SAP America, for receiving thousands of dollars in kickbacks for tipping Douglas Miller in advance of SAP’s impending acquisition of Concur Technologies.  Miller then tipped his brother, Edward Miller, and mutual friend, Barrett Biehl, as they rushed to open online brokerage accounts and make risky, short-term trades in Concur call options so they could profit substantially when the deal was publicly announced.  The SEC has also linked Salis and Douglas Miller to suspicious trades in 2007 that were made in advance of a tender for a company called Business Objects where Salis worked at the time.  SEC

June 15, 2016

The SEC charged hedge fund manager Christopher Plaford with trading on inside information received from Sanjay Valvani regarding anticipated drug approvals and from a former CMS official about impending cuts to Medicare reimbursement for certain home health services.  Plaford allegedly made $300,000 by trading based on insider information in hedge funds he managed.  Separately, the SEC charged Stefan Lumiere and Plaford with falsely inflating the value of securities held by a hedge fund managed by their firm.  Over an 18-month period, Lumiere used sham broker quotes to mismark as many as 28 securities per month, surreptitiously passing along his desired prices to brokers via his personal cell phone or a flash drive delivered by courier.  The fund consequently reported artificially inflated returns and monthly net asset values and paid out more than $5.9 million in inflated management and performance fees to its investment adviser.  SEC
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