Insider Trading

December 22, 2014

The SEC charged California-based attorney Shivbir Grewal and his wife Preetinder with insider trading on confidential information obtained from a corporate client.  According to the SEC, while serving as outside counsel to Spectrum Pharmaceuticals, Grewal learned that the company was on the brink of announcing a significant decline in expected revenue due to an unanticipated drop in orders for its top-selling drug.  Grewal sold his entire investment in Spectrum stock within 48 hours of getting the nonpublic information from company officials who sought the disclosure advice of his law firm.  The Grewals agreed to pay $90,000 to settle the SEC’s charges.  SEC

November 21, 2104

The SEC announced charged William E. Redmond Jr., former CEO and board member of engineering and chemical company GenTek Inc., with passing on insider trading to his close friend Stefano Signorastri.  GenTek’s nonpublic negotiations to find suitors for a company sale were among the topics that Redmond shared with Signorastri.  Redmond and Signorastri agreed to pay more than $324,000 to settle the SEC’s charges.  SEC

September 30, 2014

The SEC charged two individuals for insider trading on a prominent hedge fund manager’s announcement that his hedge fund had formed a negative view of Herbalife Ltd. and taken a $1 billion short position in its securities.  Specifically, the SEC’s orders find that Filip Szymik of New York City and Jordan Peixoto of Toronto engaged in insider trading in Herbalife securities in advance of hedge fund manager William Ackman’s December 20, 2012 announcement of the views of his hedge fund, Pershing Square Management, L.P.  SEC

September 22, 2014

Wells Fargo Advisors LLC agreed to pay $5 million to settle charges it failed to maintain adequate controls to prevent one of its employees from insider trading based on a customer’s nonpublic information.  The SEC also charged Wells Fargo for unreasonably delaying its production of documents during the SEC’s investigation and providing an altered internal document related to a compliance review of the broker’s trading.  This was the first time the SEC brought charges against a broker-dealer for failing to protect a customer’s material nonpublic information.  SEC

September 19, 2014

The SEC charged Brooklyn resident Frank Tamayo with facilitating a $5.6 million insider trading scheme that typically involved the passing of illegal tips via napkins or post-it notes at Grand Central Terminal.  The SEC alleges that Tamayo received material nonpublic information from Steven Metro about 13 impending corporate deals involving clients of the law firm where Metro worked.  Tamayo then tipped his stockbroker Vladimir Eydelman, who used the confidential information to illegally trade for himself and for Tamayo and other customers.  SEC

September 16, 2014

The SEC charged Dimitry Braverman, a senior information technology professional at the international law firm Wilson Sonsini Goodrich & Rosati, with insider trading ahead of several mergers and acquisitions involving firm clients being advised on the deals.  The SEC alleged Braverman used his access to nonpublic information in the firm’s client-related databases and garnered more than $300,000 in illicit profits by trading in advance of merger announcements.  Braverman began by insider trading in accounts in his own name, but shifted course when a lawyer at his firm was charged by the SEC and criminal authorities in an entirely separate insider trading scheme.  After immediately liquidating the remaining securities that he had purchased on the basis of nonpublic information, Braverman waited about 18 months and then continued his insider trading in a brokerage account held in the name of a relative living in Russia.  His concealment efforts failed, however, when SEC investigators were able to dissect a suspicious pattern of trades and trace them back to Braverman.  SEC

September 10, 2014

The SEC charged Massachusetts-based biotech company Advanced Cell Technology and its former CEO Gary H. Rabin with defrauding investors by failing to report his sales of company stock as federal securities laws require to give investors the opportunity to evaluate whether the purchases and sales by an insider could be indicative of the prospects of the company.  Rabin, who left the company earlier this year, agreed to settle the SEC’s charges by paying a $175,000 penalty.  ACT agreed to pay a $375,000 penalty.  SEC

August 26, 2014

The SEC charged Michael Anthony Dupre Lucarelli, a director of market intelligence at a Manhattan-based investor relations firm, with insider trading ahead of impending news announcements by more than a dozen clients.  According to the government, Lucarelli repeatedly accessed clients’ draft press releases stored on his firm’s computer network prior to public announcements and then routinely purchased stock or call options in advance of favorable news and sold short or bought put options ahead of unfavorable news, garnering nearly $1 million in illicit profits.  SEC

August 18, 2014

The SEC charged Patrick O’Neill, former senior vice president at Eastern Bank in Massachusetts, with insider trading in advance of the bank’s acquisition of Wainwright Bank & Trust Company.  SEC

June 25, 2014

The SEC announced it has charged two additional brokers with trading on inside information ahead of the $1.2B acquisition of SPSS Inc. in 2009 by IBM Corporation.  The SEC alleged that former brokers Benjamin Durant III and Daryl M. Payton illegally traded on a tip about the acquisition from Thomas C. Conradt, a friend and fellow broker in the New York office of a Connecticut-based broker-dealer.  SEC