U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23248 / April 28, 2015
Securities and Exchange Commission v. Frank Perkins Hixon, Jr., et al., Civil Action No. 14-cv-158 (W.D. Tex., Complaint filed February 20, 2014)
SEC Obtains Full Disgorgement, Civil Penalty, Injunctive Relief, and Industry Bar in Insider Trading Case Against Wall Street Investment Banker Who Traded Through Father's and Former Girlfriend's Accounts
The Securities and Exchange Commission today announced that on April 20, 2015, the United States District Court for the Western District of Texas entered a judgment against Frank Perkins Hixon, Jr. that enjoined him from violating certain provisions of the federal securities laws and ordered him to pay a civil penalty. The Court also ordered Hixon Jr.'s father and former girlfriend to disgorge the profits they obtained through his trading.
Based on the entry of the injunction by the District Court, the Commission separately instituted a settled administrative proceeding against Hixon Jr. that permanently barred him from associating with any broker, dealer, investment adviser, municipal advisor, transfer agent, or nationally recognized statistical rating organization, or from participating in any offering of a penny stock.
According to the Commission's Complaint, filed in the District Court on February 20, 2014, Hixon Jr. used material nonpublic information he learned in the course of his work as an investment banker to make or cause trades in the brokerage accounts of his father, Frank P. Hixon, Sr., and former girlfriend, Destiny Robinson, from at least October 2011 to January 2013. Hixon Jr. regularly logged into Robinson's brokerage account from work and elsewhere, and sometimes executed trades within minutes of learning confidential information. He traded or caused trades in the securities of three public companies:
After receiving an inquiry from the Financial Industry Regulatory Authority (FINRA), Hixon Jr.'s employer asked him in 2013 whether he knew anything about suspicious trading by individuals named Frank P. Hixon Sr. and Destiny Robinson. Although obviously well acquainted with both individuals, Hixon Jr. denied recognizing either name. When later confronted with information that he did know these individuals, Hixon Jr. continued to deceive, falsely claiming that he did not know Robinson as "Destiny" and asserting in a sworn declaration that he had not recognized the name of the city where his father has lived for more than 25 years. Hixon Jr. was subsequently terminated by his employer.
In addition to filing its Complaint on February 20, 2014, the Commission obtained an asset freeze on the brokerage account of Hixon Jr.'s former girlfriend, from which Hixon conducted a majority of the trades.
The District Court's judgment, which was entered by consent, permanently enjoined Hixon Jr. from violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 (the "Exchange Act'); and Rules 10b-5 and 14e-3 thereunder. The judgment also ordered him to pay a civil penalty of $682,500.
In addition to the judgment against Hixon Jr., the District Court also entered judgments, by consent, against Relief Defendants Frank P. Hixon, Sr. and Destiny Robinson, requiring them to disgorge the actual proceeds from the trades alleged in the Commission's Complaint, totaling $920,315.68 plus prejudgment interest.
On April 2, 2014, Hixon Jr. also pleaded guilty to criminal charges in a parallel criminal action before the District Court for the Southern District of New York in United States v. Frank Perkins Hixon, Jr., No. 14-CR-227 (S.D.N.Y.). On August 1, 2014, Hixon was sentenced to 30 months in prison followed by three years of supervised release and ordered to pay a $100,000 fine, criminal forfeiture of $710,000, and restitution of $1,204,777.80 to his employer.
The SEC's investigation was conducted by Tamara McCreary, Ty Martinez, and Jonathan Scott of the Fort Worth Regional Office. The SEC's litigation was led by Timothy Evans and David Reece. The Commission appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York, Federal Bureau of Investigation, and Financial Industry Regulatory Authority.