SEC Obtains Final Judgments Against Credit Ratings Analyst and Two Friends Charged with Insider Trading
Litigation Release No. 24704 / January 2, 2020
Securities and Exchange Commission v. Pinto-Thomaz, et al., No. 1:18-cv-05757 (S.D.N.Y. filed June 26, 2018)
On December 4, 2019, the Honorable J. Paul Oetken of the U.S. District Court for the Southern District of New York entered final judgments against a credit ratings agency employee and his two friends who engaged in insider trading that resulted in profits of approximately $300,000.
According to the SEC's complaint, filed on June 26, 2018, Sebastian Pinto-Thomaz, an analyst in the credit ratings agency's New York office, learned of The Sherwin-Williams Co.'s confidential plans to acquire The Valspar Corp. The SEC alleges that Pinto-Thomaz tipped his friends, Abell Oujaddou, a co-owner and co-manager of an upscale New York hair salon, and Jeremy Millul, a New York jeweler, who then purchased Valspar securities before the merger was announced. Valspar's shares rose 23 percent on the news, and Oujaddou and Millul sold their holdings shortly afterwards for profits of approximately $192,000 and $107,000, respectively.
Pinto-Thomaz, Oujaddou, and Millul each agreed to settle with the SEC and consented to the entry of judgments permanently enjoining them from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, ordering Millul and Oujaddou liable for disgorgement of their ill-gotten trading profits, and ordering Pinto-Thomaz liable for disgorgement of a cash payment he received from Oujaddou, with the disgorgement for all three defendants deemed satisfied by orders of forfeiture entered in a parallel criminal action. Pinto-Thomaz, who was convicted after a trial, is serving a 14-month prison sentence. Oujaddou and Millul each pled guilty, and Millul is serving a 5-month prison sentence. In a separate administrative proceeding instituted on November 12, 2019, Pinto-Thomaz also consented to a bar from association with any nationally recognized statistical rating organization.
The SEC's investigation was conducted by David C. Austin and Simona K. Suh of the SEC Enforcement Division's Market Abuse Unit and by Debbie Chan of the New York Regional Office, with assistance from John Rymas and Mathew Wong of the Unit's Analysis and Detection Center. The case was supervised by Joseph G. Sansone, Chief of the Market Abuse Unit. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.