SEC Charges Former Employee of Online Gambling Company with Insider Trading
Litigation Release No. 25422 / June 15, 2022
Securities and Exchange Commission v. David Roda and Andrew Larkin, No. 2:22-CV-02317 (E.D.Pa. filed June 13, 2022)
The Securities and Exchange Commission announced insider trading charges against David Roda, a former software engineer at Penn National Gaming's subsidiary Penn Interactive Ventures, in connection with the parent company's $2 billion acquisition of Toronto-based Score Media and Gaming, Inc.
The SEC's complaint, filed in federal district court in Philadelphia, alleges that, while employed at Penn Interactive, which provides online and mobile gambling experiences for Penn National, Roda was given confidential information about Penn National's interest in acquiring Score Media along with admonitions not to trade on that information. In breach of his duties, Roda purchased 500 out-of-the-money call options on Score Media in the weeks and days leading up to the announcement of the acquisition. Additionally, Roda tipped his longtime friend, Andrew Larkin, also charged by the SEC, who then purchased 375 Score Media shares. According to the SEC's complaint, Score Media's stock price increased nearly 80 percent after Penn National and Score Media publicly announced their deal, following which Roda and Larkin sold their holdings for unlawful profits of $560,762 and $5,602, respectively.
The SEC's complaint charges Roda and Larkin, both of Philadelphia, with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Roda has consented to the entry of a judgment that permanently enjoins him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and orders him to pay disgorgement, prejudgment interest, and a civil penalty to be determined by the Court at a later date. Without admitting or denying the allegations in the SEC's complaint, Larkin has consented to the entry of a judgment that permanently enjoins him from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and orders him to pay disgorgement of $5,602, prejudgment interest of $83.71, and a civil penalty of $5,602. The settlements are subject to Court approval.
In a parallel action, the U.S. Attorney's Office for the Eastern District of Pennsylvania announced criminal charges against Roda.
The SEC's investigation was conducted by Norman P. Ostrove with assistance from John S. Rymas of the Market Abuse Unit's Analysis and Detection Center. It was supervised by Scott A. Thompson of the Philadelphia Regional Office and Julia C. Green and Joseph G. Sansone of the Market Abuse Unit. The litigation will be led by Gregory Bockin and Spencer Willig. The SEC appreciates the assistance of the Financial Industry Regulatory Authority, the Federal Bureau of Investigation, and the U.S. Attorney's Office for the Eastern District of Pennsylvania.