U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 24012 / December 14, 2017
Securities and Exchange Commission v. Kenneth Peer, No. 2:17-cv-01865 (W.D. Wash. filed Dec. 14, 2017)
Therapist Settles Charges of Insider Trading Ahead of Acquisition Announcement
A Seattle-based therapist has agreed to settle SEC charges that he traded in the stock of zulily, Inc. (Zulily) based on information he learned from a Zulily employee during confidential counseling sessions.
The SEC's complaint alleges that, in July 2015, during counseling sessions, the Zulily employee told Kenneth Peer that Zulily was going to be acquired by Liberty Interactive, a media holding company. On three occasions between July 21, 2015 and August 10, 2015, after counseling sessions with the Zulily employee, Peer purchased a total of over $28,000 of Zulily stock. The complaint alleges that, before the market opened on August 17, 2015, Zulily announced that it had agreed to be acquired by Liberty Interactive in a tender offer. By the end of trading that day, Zulily's stock allegedly had risen by 49%, with nearly 15 times the stock's average daily trading volume. Shortly after the acquisition was announced, Peer allegedly sold all of his Zulily shares for illegal profits of approximately $10,000.
The SEC's complaint charges Peer with violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. Without admitting or denying the SEC's allegations, Peer agreed to disgorge $10,227.73 plus interest of $811.80 and pay a $10,227.73 penalty, for a total of $21,267.26. Peer also agreed to be enjoined from further violations of the charged provisions.
The SEC's investigation was conducted by Alice Liu Jensen and supervised by Steven D. Buchholz, both of the Market Abuse Unit in the San Francisco Regional Office. The SEC appreciates the assistance of FINRA in this matter.