Damon Hovannisian, et al.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23901 / August 11, 2017
Securities and Exchange Commission v. Damon Hovannisian, et al., No. 1:17-at-00617 (E.D. Cal. filed Aug. 10, 2017)
SEC Charges Four Individuals with Insider Trading in Stock of International Rectifier Corporation
On August 10, 2017, the Securities and Exchange Commission charged the spouse, father-in-law, brother-in-law, and family friend of a high-level employee of a semiconductor company with insider trading on confidential information about the company's impending acquisition by a German chipmaker.
The SEC alleges that Damon Hovannisian learned that Infineon Technologies AG planned to acquire then-El Segundo, California-based International Rectifier Corp. (IRC) from his wife, who was a high-level IRC employee. According to the complaint, he asked a friend to purchase IRC stock for him in the friend's account before the announcement, and then had this friend sell the shares two days after IRC and Infineon announced the acquisition. The SEC further alleges that, before the public deal announcement, Damon Hovannisian also tipped his father, Vernon Hovannisian, his brother, Vincent Hovannisian, and a family friend, Eddie Arakelian, who each traded on this nonpublic information. Vernon Hovannisian allegedly bought IRC stock through a brokerage account he had not used in over ten years, and sold the stock hours after the deal was announced. Vincent Hovannisian allegedly logged into his online brokerage account to buy IRC stock while he was on the phone with his brother, and sold all his IRC shares days after the acquisition announcement. Eddie Arakelian learned about the pending IRC acquisition from Damon Hovannisian when the two spent the day together at Arakelian's horse farm and bought the stock the next day. According to the SEC's complaint, the four defendants made approximately $155,000 in illicit profits.
The SEC's complaint, filed in federal court in the Eastern District of California, charges Damon, Vernon and Vincent Hovannisian, and Eddie Arakelian with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the SEC's allegations, all the defendants have consented to the entry of final judgments that permanently enjoin them from future violations of the charged provisions of the federal securities laws. The final judgments also require:
- Damon Hovannisian to pay disgorgement of $3,194.49, prejudgment interest of $313.80, and a civil penalty of $155,756.04;
- Vernon Hovannisian to pay disgorgement of $111,145.23, prejudgment interest of $10,917.55, and a civil penalty of $111,145.23;
- Vincent Hovannisian to pay disgorgement of $5,635.12, prejudgment interest of $553.53, and a civil penalty of $5,635.12; and
- Eddie Arakelian to pay disgorgement of $35,781.20, prejudgment interest of $3,614.59 and a civil penalty of $35,781.20.
The settlements are subject to court approval.
The SEC's action is being handled by Yolanda Ochoa, Finola H. Manvelian, and Kristin Escalante in the Los Angeles Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.
