SEC Charges Public Relations Executive With Insider Trading in Client's Stock
The Securities and Exchange Commission today 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 Federal Deposit Insurance Corporation (FDIC).
The SEC alleges that Renee White Fraser and her firm Fraser Communications were contacted by Pasadena-based East West Bancorp (EWBC) for marketing and public relations support during its acquisition of San Francisco-based United Commercial Bank. The very next day after agreeing to take on EWBC as a client, Fraser bought 10,000 shares of EWBC stock. She sold all of her shares after EWBC’s stock price jumped 55 percent after the public announcement of the acquisition.
Fraser agreed to settle the SEC’s charges by paying $91,530.36, which is more than double what she gained in illegal profits from her alleged insider trading.
“Fraser’s client entrusted her with highly sensitive nonpublic information, and she tried to turn that into a quick side profit,” said Michele W. Layne, Director of the SEC’s Los Angeles Regional Office. “Consultants in public relations or any career field cannot exploit their client relationships for an illegal payday in the stock market.”
According to the SEC’s complaint filed in U.S. District Court for the Central District of California, EWBC contacted Fraser Communications on Oct. 14, 2009, and shared material, nonpublic information about its upcoming FDIC-assisted transaction for the confidential corporate purpose of allowing Fraser and her employees to prepare marketing and public relations materials ahead of that acquisition. EWBC formally engaged Fraser’s firm on October 15 to assist EWBC with public relations work.
The SEC alleges that Fraser, who lives in Santa Monica, purchased 10,000 EWBC shares on October 16 after learning the previous day about the impending EWBC-United Commercial Bank transaction. EWBC announced the acquisition of United Commercial Bank’s banking operations on November 6. Fraser proceeded to sell 7,500 of her EWBC shares on November 10, the second trading day after the announcement. She sold the remaining 2,500 shares on June 24, 2011, for total combined profits of $43,868.
In settling the SEC’s charges without admitting or denying the allegations, Fraser agreed to pay $43,868 in disgorgement, $3,794.36 in prejudgment interest, and a $43,868 penalty. She consented to a permanent injunction from further violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Fraser also agreed to a permanent bar prohibiting her from serving as an officer or director of a public company.
The SEC’s investigation was conducted by Wendy E. Pearson and Finola H. Manvelian in the Los Angeles Regional Office. The SEC acknowledges the assistance of Financial Industry Regulatory Authority (FINRA).