U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23619 / August 12, 2016
Securities and Exchange Commission v. Paul T. Rampoldi , et al., Civil Action No. 3:16-cv-02017-JAH-MDD (S.D.Cal.)
SEC Charges Stockbroker and Friend with Insider Trading
The Securities and Exchange Commission on August 11 charged a stockbroker and his friend with participating in an insider trading scheme to profit in advance of two major announcements out of a pharmaceutical company.
The SEC alleges that Paul T. Rampoldi coordinated the insider trading with two other brokers at his firm as well as a then-IT executive at Ardea Biosciences. The Ardea employee tipped one of the brokers ahead of the company's announcement of an agreement to license a cancer drug and later tipped him in advance of its acquisition by AstraZeneca PLC. The SEC charged the other two brokers and the Ardea employee last year.
According to the SEC's complaint filed in federal court in San Diego against Rampoldi and William Scott Blythe III, they made approximately $90,000 in illicit profits by trading ahead of those announcements based on nonpublic information that flowed to them through one of the fellow brokers who learned it from the other after he was tipped by the IT executive. It was decided that in order to evade detection by the compliance department at the brokerage firm where Rampoldi and the others worked, Blythe would fund the purchase of Ardea call option contracts in a brokerage account he held at a different brokerage firm, and they would subsequently divide the profits among them.
In a parallel action, the U. S. Attorney's Office for the Southern District of California yesterday brought criminal charges against Rampoldi and Blythe.
The SEC's complaint charges Rampoldi and Blythe with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The SEC seeks permanent injunctions as well as disgorgement, interest, and penalties.
The SEC's investigation was conducted by Patricia A. Paw, John S. Rymas, Daniel Koster, and Brendan P. McGlynn of the Philadelphia office, and supervised by G. Jeffrey Boujoukos. The litigation will be led by David L. Axelrod and Michael J. Rinaldi. The SEC appreciates the assistance of the U. S. Attorney's Office for the Southern District of California, Federal Bureau of Investigation, and Financial Industry Regulatory Authority.
