SEC Charges California Bank Board Member's Son with Insider Trading
Aug. 7, 2018
File No. 34-83795
August 7, 2018 - The Securities and Exchange Commission today announced that a California bank board member's son has agreed to settle charges that he traded on material nonpublic information obtained from his father about a Northern California bank's nonpublic acquisition by another California bank.
According to the SEC's order, Aaron R. Smith, a San Francisco resident, learned about the acquisition in confidence from his father, a director at Valley Commerce Bancorp, based in Visalia, Calif., before it was publicly announced. Smith understood that the acquisition was sensitive information, and that he owed a duty of trust and confidence to his father to keep the information confidential. Despite this duty, in May 2016, Smith transferred a significant portion of his savings into a brokerage account and began purchasing Valley Commerce Bancorp stock. On September 22, 2016, the companies publicly announced that CVB Financial Corporation, which is based in Ontario, California, would acquire Valley Commerce Bancorp. After the acquisition announcement, Valley Commerce Bancorp's stock price increased 37 percent from the previous day's close. Based on this increase in stock price, Smith generated an unrealized gain of approximately $41,000.
Without admitting or denying the SEC's findings, Smith agreed to cease and desist from further violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, to pay disgorgement of $40,578.28 plus interest of $3,205.07, and a $40,578.28 penalty.
The SEC's investigation was conducted by Chrissy Filipp and supervised by Jennifer J. Lee in the San Francisco Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.