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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22946 / March 19, 2014

Securities and Exchange Commission v. David J. Cancian, Civil Action No. 1:14-cv-11007 (District of Massachusetts, Complaint filed March 19, 2014)

SEC Charges Massachusetts Resident with Insider Trading

The Securities and Exchange Commission today charged David J. Cancian of Lexington, Massachusetts, with insider trading ahead of an April 5, 2011 announcement by Massachusetts-based American Superconductor Corporation that caused the company's stock price to tumble 42%. Cancian made profits and avoided losses of over $46,000. Cancian has agreed to pay a total of $97,843 in disgorgement of ill-gotten gains, prejudgment interest, and a civil penalty to settle the insider trading charges.

According to the SEC's complaint, filed in federal district court in Boston, Cancian, while having drinks on April 1, 2011 with a friend who was a senior executive at the company, learned that American Superconductor's stock price was likely to drop. The next trading day, April 4, 2011, Cancian sold the majority of American Superconductor stock he owned and sold "covered call options" to offset losses on the stock he continued to hold. On April 5, 2011, after the close of trading, American Superconductor announced that its financial results for its fourth quarter and fiscal year ended March 31, 2011 would be lower than expected due to a deteriorating relationship with its primary customer, Sinovel Wind Group Co., Ltd., of China.  American Superconductor's stock price plummeted 42% the next day. As a result of Cancian's trading ahead of the company's announcement of negative news, he made profits and avoided losses of $46,930.

Cancian has agreed to settle this case, without admitting or denying the allegations in the SEC's complaint, by consenting to a judgment enjoining him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and ordering him to pay disgorgement of $46,930 (representing his ill-gotten gains) plus prejudgment interest of $3,983 and a civil penalty of $46,930.

The SEC's investigation was conducted by Asita Obeyesekere, Michael Foster, and Kevin Kelcourse in the SEC's Boston Regional Office. The Commission acknowledges the assistance of the Options Regulatory Surveillance Authority and the Financial Industry Regulatory Authority in this matter. The SEC's investigation is ongoing.

SEC Complaint

 

http://www.sec.gov/litigation/litreleases/2014/lr22946.htm


Modified: 03/19/2014