Insider Trading

June 3, 2016

The SEC charged Rhode Islanders Michael J. Maciocio and David P. Hobson with insider trading in the securities of deal targets being pursued by the pharmaceutical company where Maciocio worked.  The SEC alleges that Maciocio obtained confidential clinical and business data about pharmaceutical firms being considered by his company for potential acquisitions and business relationships, and that he used this nonpublic information to trade in their stocks.  Maciocio made approximately $116,000 in illegal profits based on this trading activity.  The SEC also alleges that Maciocio illegally tipped his childhood friend, Hobson, a stockbroker who utilized the nonpublic information to realize at least $187,000 in illicit trading profits for himself and $145,000 for his customers.  SEC

May 31, 2016

The SEC announced insider trading charges against investment banker Steven McClatchey and his friend and plumber Gary Pusey.  The SEC alleges that McClatchey had regular access to highly confidential nonpublic information about impending transactions being pursued for investment bank clients.  McClatchey allegedly tipped Pusey on 10 different occasions ahead of public merger announcements.  Pusey allegedly used the misappropriated nonpublic information to generate $76,000 in illicit trading profits.  In return for the tips, Pusey provided McClatchy with free services during his bathroom remodel and paid him thousands of dollars in cash that he typically placed in McClatchey’s gym bag while at the marina where they kept their boats or which he handed to him directly in his garage.  SEC

May 19, 2016

The SEC announced insider trading charges against professional sports gambler William “Billy” Walters.  The SEC alleges that Walters was owed money by Thomas C. Davis, former board member of Dean Foods.  According to the SEC’s complaint, Davis regularly shared insider information about Dean Foods with Walters in advance of market-moving events.  The two communicated using prepaid cell phones and through other methods in an effort to avoid detection.  Around 2013, when Davis was lacking market-moving information about Dean Foods to share with Walters, he began sharing non-public information about strategic plans for Darden Restaurant group which Davis had subject to a non-disclosure agreement.  Walters allegedly made $40 million based on the illegal stock tips from Davis.  The SEC also included professional golfer Phil Michelson as a relief defendant.  The SEC alleges that Mickelson owed Walters money and Walters urged him to trade in Dean Food securities based on Davis’ information.  Michelson reaped more than $931,000 in profits based on his trading of Dean Foods securities and used part of the money to pay his trading debts to Walters.  Michelson has agreed to full disgorgement of his trading profits plus interest.  SEC

May 2, 2016

Silicon Valley executive Peter D. Nunan will pay $534,303 to settle charges that he traded on inside information he received in his professional role with a subsidiary of semiconductor equipment manufacturer Screen Holdings Company.  The SEC alleged that Nunan received confidential information from a board member of FSI International that FSI was going to be acquired by a Japan-based semiconductor equipment company in FSI’s attempt to solicit a competing offer from Screen Holdings.  Nunan purchased over 100,000 shares of FSI and made over $250,000 in profits from his sale of the stock after the merger was announced.  SEC

April 13, 2016

The SEC announced insider trading charges against John Ayfriyie, a research analyst who learned about the impending acquisition of home security company The ADT Corporation by Apollo Group Management.  The SEC alleges that Ayfriyie accessed several highly confidential, deal-related documents on his firm’s computer network and purchased thousands of high-risk, out-of-the-money ADT call options in his mother’s investment account, in anticipation that ADT’s stock price would rise when the transaction was publicly announced.  In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Ayfriyie.  SEC

March 9, 2016

Florida man Jay Y. Fung has agreed to pay $760,000 to settle charges by the SEC that he traded on inside information by purchasing stock and call options in Pharmasset Inc. based on a friend’s tip that it was about to be acquired.  The SEC previously charged Fung’s friend and tipper, Kevin Dowd, who has agreed to pay back the cash kickbacks he received from Fung and has pled guilty in a parallel criminal case.  SEC

February 5, 2016

The SEC filed charges against Dennis Wayne Hamilton, an executive at Connecticut-based electronics company Harman International Industries, alleging that he made more than $130,000 in illegal profits by trading on nonpublic information he learned on the job in advance of Harman’s release of its fiscal year 2014 first quarter earnings.  In a parallel action, the U.S. Attorney’s Office for the District of Connecticut filed criminal charges against Hamilton.  SEC

January 8, 2016

Steven Cohen, founder and manager of hedge fund S.A.C. Capital Advisors LLC, will be prohibited from supervising funds that manage outside money until 2018.  The SEC found that Cohen ignored red flags of insider trading and failed to supervise a former portfolio manager, Mathew Martoma, who engaged in insider trading in 2008 while employed at C.R. Intrinsic Investors, an investment advisory firm that was a wholly-owned subsidiary of S.A.C. Capital Advisors.  C.R. Intrinsic previously paid more than $600 million to settle SEC charges of insider trading.  Several of Cohen’s entities, including C.R. Intrinsic and S.A.C. Capital Advisors, previously paid $1.2 billion to resolve related criminal charges brought by the U.S. Attorney’s Office for the S.D.N.Y.  SEC

December 28, 2015

Two traders in China and Hong Kong, Zhichen Zhou and Yannan Liu, will pay more than $920,000 to settle charges of insider trading.  The traders’ assets were frozen last month when the SEC’s complaint was filed against them.  They will disgorge the entirety of their ill-gotten profits and pay additional penalties.  The SEC’s complaint alleged that Zhou and Liu traded in two healthcare company stocks, MedAssets Inc. and Chindex International, based on nonpublic information about their impending acquisitions by private equity firms.  Liu was an associate at TPG Capital which had ties to both of the deals.  SEC

September 14, 2015

Ukranian-based Jaspen Partners Limited and its CEO Andriy Suprnonok agreed to pay $30 million to settle SEC allegations that they profited from trading on non-public corporate information hacked from newswire services.  Jaspen and Supranonok were two of the traders alleged to have received stolen data hacked from newswire services and transmitted to a web of international traders.  According to the SEC’s complaint, Jaspen and Supranonok made approximately $25 million buying and selling contracts-for-difference (CFDs) on the basis of hacked press releases.  The SEC’s litigation continues against the remaining 32 defendants charged in the case. SEC