U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21469 /March 31, 2010
Securities and Exchange Commission v. Gary Navarro, Civ. Action No. 4:10-CV-189-CVE-FHM (United States District Court for the Northern District of Oklahoma)
SEC Files Settled Insider Trading Charges Against Former Oil Purchasing Manager
The Securities and Exchange Commission filed a civil action in the United States District Court for the Northern District of Oklahoma on March 30, 2010, alleging that Gary Navarro, 58, of Wichita, Kansas, engaged in insider trading in the securities of the then Nasdaq-listed SemGroup Energy Partners, LP ("SGLP") (now Blueknight Energy Partners, LP).
According to the Commission's complaint, from July 8 through July 13, 2008, in the course of his employment as a crude oil purchasing manager at SemCrude, LP, Navarro learned that SemGroup, LP, the privately-held parent of SemCrude and SGLP, and SGLP's largest customer, was experiencing liquidity issues. The complaint further alleges that on July 14, after learning this information, Navarro liquidated his SGLP holdings — selling 5,400 SGLP units at an average sale price of approximately $23.78 per share, for total sale proceeds of $128,442.41. According to the complaint, by secretly trading on the non-public information, Navarro breached duties of trust and confidence owed to his employer.
On July 17, after the close of trading, SGLP announced that SemGroup, LP was "experiencing liquidity issues" and was considering bankruptcy. The next day, SGLP's unit price closed at $8.30 per share, 65% lower than Navarro's average sale price. By selling his SGLP holdings on July 14, Navarro avoided losses of $83,602.
Without admitting or denying the allegations in the complaint, Navarro has consented to a permanent injunction against future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and to pay disgorgement of the $83,602 loss avoided plus prejudgment interest and a civil penalty of $83,602.
The staff's investigation is ongoing.