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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22725 / June 12, 2013

Securities and Exchange Commission v. Victor Dosti and Whittier Trust Company, Civil Action No. 13-civ-3897 (S.D.N.Y.)

SEC Files Insider Trading Charges Against Whittier Trust and Fund Manager

On June 7, 2013, the Securities and Exchange Commission charged a South Pasadena, Calif.-based wealth management company and a former fund manager with insider trading on non-public information about technology companies. The charges arise from the agency's ongoing investigation into expert networks and hedge fund trading.

The SEC alleges that Whittier Trust Company and fund manager Victor Dosti of San Marino, California, participated in an insider trading scheme involving the securities of Dell, Nvidia Corporation, and Wind River Systems. Dosti generated profits and avoided losses for funds he managed at Whittier Trust by trading on confidential information that he obtained from Danny Kuo, a Whittier Trust fund manager who Dosti supervised. Kuo was charged by the SEC in January 2012 and is currently cooperating with the investigation.

Whittier Trust and Dosti agreed to pay nearly $1.7 million to settle the charges.

According to the SEC's complaint filed in U.S. District Court for the Southern District of New York, Dosti used non-public information obtained from employees at Dell and Nvidia to trade in advance of five quarterly earnings announcements in 2008, 2009 and 2010. Dosti reaped profits and avoided losses of more than $475,000 for Whittier Trust funds. Dosti also made $247,000 in illicit profits for Whittier Trust funds by trading Wind River stock based upon detailed information that Kuo obtained from an Intel employee about Intel's confidential negotiations to acquire Wind River in 2009.

The SEC's complaint charges Whittier Trust and Dosti with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Section 17(a) of the Securities Act of 1933. Whittier Trust agreed to pay disgorgement of $724,051.62 plus prejudgment interest of $75,296.00 and a penalty of $724,051.62. Dosti agreed to pay disgorgement of $77,900.00 plus prejudgment interest of $2,951.43, and a penalty of $77,900.00. The settlements are subject to court approval and would permanently enjoin Whittier Trust and Dosti from future violations of the antifraud provisions of the federal securities laws. Whittier Trust and Dosti neither admit nor deny the SEC's charges. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.

 

http://www.sec.gov/litigation/litreleases/2013/lr22725.htm


Modified: 06/12/2013