U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22707 / May 24, 2013
Securities and Exchange Commission v. Daniel Bergin, et al., Civil Action No. 3:13 cv 1940
SEC Charges Dallas-Based Trader with Front-Running
The Securities and Exchange Commission filed a civil injunctive action on May 23, 2013, in the United States District Court for the Northern District of Texas charging Daniel Bergin, a trader with Commission-registered investment adviser Cushing MLP Asset Management, LP, with trading ahead of client trades, insider trading, and failing to report trades to his employer.
The Commission’s complaint alleges that, beginning in at least 2011, Bergin defrauded Cushing and its clients by using Cushing’s confidential information to secretly trade on and ahead of Cushing’s client trades in master limited partnership (“MLP”) issuers, MLP-related securities, and other energy-income securities (collectively referred to as “MLP/Energy securities”). To conceal the trades, Bergin made them through his wife’s brokerage accounts. The complaint alleges that, as a Cushing trader, Bergin was privy to material, non-public information regarding the size and timing of trades that Cushing intended to make for its clients. According to the complaint, Bergin used this confidential information to personally trade in his wife’s brokerage accounts in the same securities and on the same day he placed Cushing client trades approximately 400 times, reaping illegal profits of at least $1.7 million.
The SEC’s complaint names Bergin’s wife Jacqueline Zaun as a relief defendant for the purpose of recovering Bergin’s illegal trading profits in her accounts.
To halt Bergin’s ongoing scheme, the Commission sought and the District Court granted an emergency court order freezing Bergin and Zaun’s assets.
The SEC’s complaint alleges that Bergin violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 as well as Section 17(j) of the Investment Company Act of 1940 and Rule 17j-1. The complaint seeks disgorgement, prejudgment interest, and a penalty as well as a permanent injunction against Bergin.