Former Hedge Fund Analyst Settles Insider Trading Charges
Jan. 10, 2020
File No. 3-19645
January 10, 2020 - The Securities and Exchange Commission today announced settled charges against a former hedge fund analyst for insider trading in advance of a positive earnings announcement by the healthcare company HCA Holdings, Inc.
According to the SEC's order, in June 2014, Michael Mindlin, then a healthcare analyst at a New York-based registered investment adviser that managed multiple hedge funds, learned material nonpublic information about HCA's financial performance from a close friend who was an executive at HCA at the time. The order finds that the HCA executive had reviewed internal reports indicating that the Affordable Care Act was having a more positive impact on HCA's earnings than previously expected. The order finds that the HCA executive mentioned this positive expectation to Mindlin, and Mindlin misappropriated the information by causing his employer to purchase HCA stock. On July 16, 2014, HCA issued a press release announcing its higher than anticipated earnings for the second quarter and upward revised earnings guidance for the entire year. When HCA's stock price rose by over 10 percent on the day of the announcement, the order finds that Mindlin's employer sold the HCA stock, realizing a profit of over $3.3 million.
The SEC order finds that Mindlin violated the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the SEC's findings, Mindlin consented to a cease-and-desist order, disgorgement of $60,482 representing the performance-based compensation he received as a result of the profits that his employer generated by trading HCA stock in June and July of 2014, prejudgment interest of $13,122, and a civil money penalty of $60,482. Mindlin also consented to an associational bar and an investment company prohibition, with a right to apply for reentry after three years.
The SEC's investigation was conducted by John C. Lehmann, Neil Hendelman, and Dugan Bliss of the SEC's New York Regional Office and by David Makol and Simona Suh of the SEC's Market Abuse Unit. The investigation was supervised by Sanjay Wadhwa and by the Market Abuse Unit's Chief, Joseph G. Sansone. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.