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U.S. Securities and Exchange Commission

SEC Enforcement Actions: Insider Trading Cases


Illegal insider trading generally occurs when a security is bought or sold in breach of a fiduciary duty or other relationship of trust and confidence while in possession of material, nonpublic information. Insider trading violations can include the "tipping" of such information. Insider trading continues to be a high priority area for the SEC's enforcement program. In recent years, the SEC has filed insider trading cases against hundreds of entities and individuals, including financial professionals, hedge fund managers, corporate insiders, attorneys, and others whose illegal tipping or trading has undermined the level playing field that is fundamental to the integrity and fair functioning of the capital markets.

Examples of insider trading enforcement actions taken by the SEC include:

2014
  • Four California Residents - SEC filed charges against the individuals behind a $12 million insider trading scheme involving trading in Ross Stores stock options based on nonpublic information about monthly sales results leaked by one of the retailer's employees. (6/13/14)
  • Vitamin Company Former Board Member - SEC charged Glenn Cohen and others in his family circle with insider trading for $175,000 in illicit profits ahead of NBTY's sale to a private equity firm. They agreed to pay $500,000 to settle the charges. (5/22/14)
  • Two Clinical Drug Trial Doctors - SEC charged Dr. Franklin M. Chu and Dr. Daniel J. Lama with illegally trading on inside knowledge that the FDA had halted the clinical trials of a new prostate cancer drug. They made more than $45,000 in illicit profits from their alleged insider trading, and agreed to settle the SEC's charges by paying a combined total of $116,864. (5/19/14)
  • Three Sales Managers - SEC charged Derek Cohen, Robert Herman, and Michael Fleischli with insider trading ahead of a major acquisition based on nonpublic information they learned on the job at San Diego-based Qualcomm Inc. (5/12/14)
  • Three Software Company Founders - SEC charged Herbert Richard Lawson, William Lawson, and John Cerullo with insider trading ahead of the company’s sale by misusing nonpublic information to take unfair advantage of incorrect media speculation and analyst reports. They agreed to pay nearly $5.8 million to settle the charges. (5/12/14)
  • E-Commerce Company Executive and Five Traders - SEC charged former GSI Commerce executive Christopher Saridakis for tipping friends and relatives with confidential information in advance of eBay’s acquisition of the company where he worked. The SEC unraveled the case with extensive cooperation by some of the tippees, resulting in settlements totaling more than $1.1 million. (4/25/14)
  • Biopharmaceutical Company Executive and Two Traders- SEC charged a Genta Inc. executive who tipped an emergency room physician and a patient with confidential information about the company’s key developmental drug. Dr. Loretta Itri and the two traders agreed to settle the charges. (4/21/14)
  • Former BP Employee - SEC charged Keith A. Seilhan - one of BP's senior responders during the 2010 Deepwater Horizon oil spill - with illegally selling his family’s BP securities after receiving confidential information about the severity of the spill that the public didn't know. (4/17/14)
  • Two Friends- SEC charged Walter D. Wagner and Alexander J. Osborn with insider trading on confidential information from an investment banker about an impending transaction between engineering and construction companies. (4/3/14)
  • Two Husbands - In two unrelated cases, the SEC charged Tyrone Hawk and Ching Hwa Chen with insider trading on confidential information they learned from their wives about Silicon Valley-based tech companies. They each agreed to financial sanctions to settle the charges. (3/31/14)
  • Stockbroker and Law Firm Clerk - SEC charged Vladimir Eydelman and Steven Metro, who were linked through a mutual friend, with insider trading for $5.6 million in illicit profits based on nonpublic information that Metro obtained by accessing confidential documents in his law firm's computer system. (3/19/14)
  • Wall Street Investment Banker - SEC charged Frank "Perk" Hixon Jr. with making nearly $1 million in illicit profits by insider trading in a former girlfriend's brokerage account to pay child support. (2/21/14)
  • Chicago-Based Accountant - SEC charged Steven M. Dombrowski with insider trading ahead of the release of financial results by the company where he worked. He made more than a quarter-million dollars in illicit profits. (1/29/14)
2013
  • Microsoft Manager and Friend - SEC charged Brian D. Jorgenson and Sean T. Stokke with tipping and trading ahead of Microsoft announcements based on inside information that Jorgenson learned at work. (12/19/13)
  • Miami-Based Trader - SEC charged Charles Raymond Langston III with insider trading on confidential information in advance of a public announcement that significantly decreased the value of a China-based company's stock. (12/3/13)
  • Hedge Fund Trader - SEC charged Mark Megalli with insider trading on nonpublic information he obtained about Carter's Inc. to give the hedge fund where he worked a $3.2 million trading edge. (11/14/13)
  • Former Qualcomm Executive and His Financial Advisor - SEC charged Jing Wang and Gary Yin with insider trading through secret offshore accounts ahead of major Qualcomm announcements for more than a quarter-million dollars in profits. (9/23/13)
  • Advisory Firm Owner and Stockbroker - SEC charged Tibor Klein and Michael Shechtman with insider trading based on non-public information in advance of a merger announcement by pharmaceutical companies. (9/20/13)
  • Green Mountain Coffee Employee - SEC announced charges against Chad McGinnis and his friend Sergey Pugach for insider trading in advance of Green Mountain Coffee's quarterly earnings announcements and garnering $7 million in illicit profits. (8/2/13)
  • Spain-Based Traders - SEC charged a former high-ranking official at Banco Santander S.A. and a former judge with insider trading based on non-public information about a proposed acquisition for which the Madrid-based investment bank was acting as an advisor. (7/30/13)
  • Investor Relations Firm CEO - SEC charged Stephen B. Gray with insider trading in the securities of clients that his firm was confidentially assisting prior to their major public announcements. (7/26/13)
  • Insider Traders in Onyx Pharmaceuticals - SEC obtained an emergency court order to freeze the assets of traders using foreign accounts to reap more than $4.6 million from trading in advance of a public announcement about an acquisition offer. (7/3/13)
  • Thailand-Based Trader - SEC charged Badin Rungruangnavarat and obtained an emergency court order to freeze more than $3 million in profits he made from insider trading in advance of a Smithfield Foods acquisition announcement. (6/5/13)
  • Microcap Company CEO - SEC charged Laidlaw Energy Group CEO Michael Bartoszek, who illicitly profited from selling his shares of company stock based on insider knowledge that the company was struggling financially, which was undisclosed to investors. (6/5/13)
  • Former Executive in Professional Group - SEC charged Mark Begelman with insider trading ahead of a merger based on nonpublic information that he learned from a fellow member of a professional organization of business leaders. (4/22/13)
  • Toronto-Based Investment Banker - SEC charged Richard Bruce Moore with insider trading by using information that he obtained through his job of pitching investment ideas to the Canada Pension Plan Investment Board (CPPIB). Moore agreed to pay more than $340,000 to settle the charges. (4/16/13)
  • Denver-Based Businessman - SEC charged Scott Reiman with insider trading based on confidential information he obtained from the CEO of an oil and gas company that was about to secure a huge investment. Reiman agreed to pay nearly $900,000 to settle the charges. (4/15/13)
  • KPMG Partner and Friend - SEC charged Scott London and his friend Bryan Shaw with insider trading based on nonpublic information that he learned as the partner in charge of KPMG's Pacific Southwest audit practice. (4/11/13)
  • Hedge Fund Analyst and Two Others - SEC charged a California-based hedge fund analyst with insider trading in advance of a merger of two technology companies based on nonpublic information he received from an executive at one of the companies. The executive and another trader also were charged in the $29 million scheme. (3/26/13)
  • Sigma Capital Management - SEC charged the New York-based hedge fund advisory firm with insider trading based on nonpublic information obtained through one of its analysts about the quarterly earnings of Dell and Nvidia Corporation. The firm agreed to pay nearly $14 million to settle the charges. (3/15/13)
  • Suspected Insider Trading in Heinz Stock - SEC obtained an emergency court order to freeze assets in a Swiss-based trading account used to reap more than $1.7 million from trading in advance of a public announcement about the acquisition of H.J. Heinz Company. (2/24/13)
  • Florida-Based Financial Adviser - SEC charged Kevin L. Dowd with illegally tipping inside information he learned about the upcoming sale of a pharmaceutical company in exchange for $35,000 and a jet ski dock. (1/25/13)
2012
  • Hedge Fund Manager Trading in Chinese Bank Stocks - SEC charged the manager of two New York-based hedge funds with conducting a pair of trading schemes involving Chinese bank stocks and making $16.7 million in illicit profits. Sung Kook "Bill" Hwang and his firms Tiger Asia Management and Tiger Asia Partners agreed to pay $44 million to settle the charges. (12/12/12)
  • Investment Banker and Nine Others - SEC charged an investment banker and nine others in an insider trading ring that garnered more than $11 million in illicit profits trading on confidential information about impending mergers. The investment banker misused his position at Wells Fargo Securities to illegally tip friends about four impending merger transactions involving firm clients. (12/5/12)
  • Two Retail Brokers - SEC charged two brokers who worked at a Connecticut-based broker-dealer with insider trading on nonpublic information ahead of IBM's acquisition of SPSS Inc. One of the brokers learned confidential details from his roommate, a research analyst who obtained the information from an attorney working on the transaction who discussed it in confidence. The insider trading yielded more than $1 million in illicit profits. (11/29/12)
  • Hedge Fund Firm and Two Others - SEC charged Stamford, Conn.-based hedge fund advisory firm CR Intrinsic and its former portfolio manager along with a medical consultant for an expert network firm for their roles in a $276 million insider trading scheme involving a clinical trial for an Alzheimer's drug being jointly developed by two pharmaceutical companies. (11/20/12)
  • Health Care Company Employees and High School Friends - SEC charged three health care company employees and four others in a New Jersey-based insider trading ring of various high school friends generating $1.7 million in illegal profits and kickbacks by trading in advance of 11 public announcements involving mergers, a drug approval application, and quarterly earnings of pharmaceutical companies and medical technology firms. (11/19/12)
  • Investment Bank Analyst - SEC charged a former analyst at a Boston-based investment bank with illegally tipping a longtime college friend with confidential information he gleaned from unsuspecting co-workers about clients involved in impending mergers and acquisitions. The insider trading resulted in more than $600,000 in illegal profits. (9/27/12)
  • Insider Trader in Burger King Stock - SEC obtained an emergency court order to freeze the assets of a stockbroker who used nonpublic information from a customer and engaged in insider trading ahead of Burger King's announcement that it was being acquired by a New York private equity firm. (9/20/12)
  • Trio in North Carolina - SEC charged a former member of the board of directors at a North Carolina-based insurance company with illegally tipping inside information about an impending merger to a friend and business associate, who subsequently tipped his golfing partner. (9/20/12)
  • Public Relations Executive - SEC charged the CEO of a Los Angeles-based public relations firm with insider trading on nonpublic information she learned from a client that was about to acquire a bank in a deal assisted by the FDIC. (9/5/12)
  • Georgia-Based Insider Trading Ring - SEC charged eight individuals living in the Griffin, Ga., area for their involvement in an insider trading ring that generated more than $500,000 in illegal profits based on nonpublic information about an upcoming company merger. (8/28/12)
  • Former Major League Baseball Players and Company CEO - SEC announced a second round of charges involving insider trading ahead of an acquisition of Advanced Medical Optics. Newly charged are the company's Chairman and CEO James Mazzo, who was the source of the illegal tips, and Baseball Hall of Famer Eddie Murray and Utah businessman David Parker, who traded on confidential information. Murray agreed to pay $358,151 to settle the charges. (8/17/12) … See also: Doug DeCinces
  • Pharmaceutical Company Executive - SEC charged Bristol-Myers Squibb executive Robert Ramnarine with insider trading for more than $300,000 in illegal profits by exploiting confidential information about companies being targeted for potential acquisitions by Bristol-Myers Squibb. (8/2/12)
  • Insider Traders in Nexen Acquisition - The SEC obtained a court order to freeze the assets of traders using accounts in Hong Kong and Singapore to reap more than $13 million in illegal profits by trading in advance of a public announcement that China-based CNOOC Ltd. agreed to acquire Canada-based Nexen Inc. (7/27/12)
  • Chairman and CEO of Computer Storage Device Company - SEC charged the chairman and CEO of a California-based computer storage device company with insider trading in the secondary offering of his stock shares at a time when he knew that a major customer's demand for one of the company's most profitable products was turning out to be less than expected. (7/19/12)
  • Five Physicians - SEC charged five doctors with insider trading in the stock of an East Lansing, Mich.-based company at which one of them served as chairman of the board of directors. (7/10/12)
  • Founder of Equity Research Firm - SEC charged the owner of the California-based equity research firm Insight Research with insider trading as part of agency's ongoing investigation of insider trading involving “expert networks” that provide specialized information to investment firms. (6/28/12)
  • Yahoo Executive and Ameriprise Manager - SEC charged a former executive at Yahoo! Inc. and a former mutual fund manager at a subsidiary of Ameriprise Financial Inc. with insider trading on confidential information about a search engine partnership between Yahoo and Microsoft. (5/21/12)
  • Movie Producer and Ring of Relatives and Associates - SEC charged a Hollywood movie producer along with his brother, cousin, and three others in his circle of friends and business partners for insider trading in the stock of a company for which he served on the board of directors. (5/8/12)
  • Financial Advisors and Circle of Family and Friends - SEC charged two financial advisors and three others in their circle of family and friends with insider trading on confidential information about merger negotiations between a Philadelphia company and a Japanese firm. They made more than $1.8 million in illicit profits. (3/13/12)
  • Expert Consulting Firm and Owner - SEC charged John Kinnucan and his Portland, Oregon-based expert consulting firm Broadband Research Corporation with tipping clients with material nonpublic information obtained from prohibited sources inside public companies. Clients then traded on the inside information. (2/17/12)
  • California Hedge Fund Manager - SEC charged Douglas F. Whitman and his firm Whitman Capital for their involvement in the insider trading ring connected to Raj Rajaratnam and Galleon Management. Whitman's illegal trading resulted in nearly $1 million in ill-gotten gains. (2/10/12)
  • Hedge Fund Managers and Analysts - SEC charged multi-billion dollar hedge fund advisory firms Diamondback Capital Management LLC and Level Global Investors LP as well as seven fund managers and analysts involved in a $78 million insider trading scheme based on nonpublic information about Dell's quarterly earnings and similar information about Nvidia Corporation. (1/18/12)
2011
  • Former Goldman Sachs and Procter & Gamble Board Member - SEC charged former McKinsey & Co. global head Rajat Gupta with illegally tipping hedge fund manager Raj Rajaratnam while serving on the boards of Goldman Sachs and Procter & Gamble. (10/26/11)
  • Goldman Sachs Employee - SEC charged Spencer Mindlin and his father with insider trading on confidential information about Goldman's trading strategies and intentions that he learned while working on the firm's ETF desk. (9/21/11)
  • Global Consulting Executive - SEC charged a former global consulting firm executive and his friend who once worked on Wall Street with insider trading on confidential information about impending takeovers of two biotechnology companies for more than $2.6 million in illicit profits. (9/15/11)
  • Hedge Fund Manager and Company Insiders - SEC charged James Turner II and his firm Clay Capital Management with insider trading ahead of public announcements about corporate earnings and merger activity based on confidential information he obtained through his relationships with company insiders, who also were charged in the scheme that generated illicit gains of nearly $3.9 million. (8/31/11)
  • Corporate Board Member - SEC charged former Mariner Energy Inc. board member H. Clayton Peterson and his son with insider trading on confidential information about the impending takeover of the company. The son also tipped several close friends. The Petersons and their tippees obtained more than $5.2 million in illicit profits. (8/5/11)
  • Former Major League Baseball Player - SEC charged Doug DeCinces and three others with insider trading ahead of a company buyout and obtaining more than $1.7 million in illegal profits. DeCinces agreed to pay $2.5 million to settle the SEC's charges. (8/4/11)
  • Emergency Action Against Three Swiss-Based Entities - SEC obtained asset freezes against entities charged with insider trading around an acquisition announcement. The asset freezes were intended to prohibit the foreign firms from transferring the proceeds of their illegal trading overseas. (7/18/11)
  • Former NASDAQ Managing Director - SEC charged Donald L. Johnson, a former managing director of The NASDAQ Stock Market, with insider trading on confidential information that he misappropriated while working in a market intelligence unit that communicates with executives at listed companies about impending public announcements that could affect their stocks. Johnson obtained illicit trading profits of at least $755,000 during a three-year period. (5/26/11)
  • Former FrontPoint Partners Hedge Fund Portfolio Manager - SEC charged Dr. Joseph F. "Chip" Skowron, a former hedge fund portfolio manager affiliated with a FrontPoint Partners LLC healthcare fund, with insider trading based on confidential information about negative details of an experimental drug that he received from Dr. Yves Benhamou, a medical researcher overseeing a clinical drug trial. (The SEC charged Benhamou on 11/2/10 for his misconduct in this matter). The material non-public information that Skowron received allowed the hedge funds that he managed to avoid losses of at least $30 million. (4/13/11)
  • Insider Trading Scheme Involving Corporate Attorney and Wall Street Trader - SEC charged charged corporate attorney Matthew Kluger and Wall Street trader Garrett Bauer for their involvement in a highly organized serial insider trading ring that traded in advance of merger and acquisition announcements involving clients of the law firm Wilson Sonsini Goodrich & Rosati. The ring made at least $32 million in illegal profits between April 2006 and March 2011. (4/6/11)
  • Insider Trading by FDA Chemist - SEC charged Cheng Yi Liang, a chemist at the U.S. Food and Drug Administration, with insider trading on confidential information concerning upcoming announcements of FDA drug approval decisions, generating more than $3.6 million in illicit profits and avoided losses. (3/29/11)
  • Expert Networks Insider Trading Scheme - SEC charged a New York-based hedge fund and four hedge fund portfolio managers and analysts who illegally traded on confidential information obtained from technology company employees moonlighting as expert network consultants, in a scheme that netted more than $30 million in illicit profits.
  • Former Board Chairman of Home Diagnostics - SEC charged George Holley, a co-founder and former Chairman of the Board of Home Diagnostics Inc., with illegally tipping friends and business associates with inside information about an impending acquisition of the company. Holley's tips resulted in combined illicit profits of at least $170,000. (1/13/11)
2010
  • Former Law Firm Technology Manager and Brother-in-Law - SEC charged a former information technology manager at a Delaware law firm and his brother-in-law with insider trading on confidential information about impending mergers and acquisitions by the law firm's clients. The insider trading scheme resulted in over $182,000 in illegal profits. (12/7/10)
  • Medical Researcher Tipping Inside Information about Clinical Trial - SEC charged Yves Benhamou, a French medical doctor and researcher, with tipping a hedge fund manager with confidential information about a clinical drug trial that he was overseeing. (The hedge fund manager was subsequently charged by the SEC on 4/13/11 for his misconduct in this matter). Benhamou tipped the hedge fund manager with non-public negative details about an experimental drug ahead of a public announcement by the company that manufactured the drug. Based on Benhamou's tips, the hedge fund manager sold his shares in the drug company, allowing the hedge funds to avoid losses of at least $30 million. (11/2/10)
  • Pharmaceutical Company Insider and Former Hedge Fund Manager - SEC charged James W. Self, Jr., a pharmaceutical company insider, and Stephen R. Goldfield, a former hedge fund manager, with insider trading in advance of an announcement that AstraZeneca would acquire MedImmune, Inc. The material non-public information about the acquisition allowed the former hedge fund manager to realize illicit profits of approximately $14 million. (9/1/10)
  • Asset Freeze for Insider Trading by Spain-based Traders - In an expedited investigation, the SEC swiftly charged two residents of Spain with insider trading and obtained an emergency asset freeze. The residents made nearly $1.1 million by trading while in the possession of material non-public information in advance of the public announcement of a tender offer by BHP Billiton Plc to acquire Potash Corp. of Saskatchewan Inc. One of the defendants was the head of a research arm at Banco Santander, S.A., a Spanish banking group advising BHP on its bid. (8/20/10)
  • Former Deloitte Partner and Son - SEC charged Thomas P. Flanagan, a former Deloitte and Touche LLP partner, and his son, Patrick T. Flanagan, with insider trading in the securities of several of the firm's audit clients. The illegal trading resulted in combined profits of approximately $490,000. The former Deloitte partner and his son agreed to pay more than $1.1 million to settle the SEC's charges. (8/4/10)
  • Corporate Insider Brothers - SEC charged Samuel Wyly and Charles Wyly with insider trading in the securities of a company in which they served as the Chairman and Vice Chairman of the Board. Through their positions on the company's Board, the Wyly brothers knew that the company had decided to put itself up for sale. Based on this material non-public information, the Wyly brothers made a large and bullish transaction in the company's securities that yielded over $31 million in illicit profits. (7/29/10)
  • Pequot Capital Management and CEO Arthur Samberg - SEC charged hedge fund manager Pequot Capital Management, Inc. and its Chairman and CEO Arthur Samberg with insider trading in Microsoft Corporation securities. The SEC separately charged a former Microsoft employee who later worked at Pequot for allegedly tipping the firm and Samberg with non-public information about Microsoft's earnings. Pequot and Samberg paid nearly $28 million to settle the SEC's charges. (5/27/10)
  • Wall Street Securities Professional Using Coded E-mail Messages - SEC charged Igor Poteroba, an investment banker at UBS Securities LLC, and two others in a clandestine insider trading ring that netted approximately $1 million in illicit profits by trading ahead of at least 11 mergers, acquisitions, and other corporate deals. The traders used coded e-mail messages in an attempt to conceal their unlawful trading. (3/24/10)
2009
   

 

http://www.sec.gov/spotlight/insidertrading/cases.shtml

Modified: 06/17/2014