SEC Charges Investment Banking Analyst with Insider Trading
Litigation Release No. 24568 / August 16, 2019
Securities and Exchange Commission v. Bill Tsai, No. 1:19-cv-07501 (S.D.N.Y. filed August 12, 2019)
On August 12, 2019, the Securities and Exchange Commission ("SEC") charged an analyst at a large international investment bank with insider trading based on confidential information that he learned about Siris Capital Group's plans to acquire Electronics for Imaging, Inc. ("EFII").
According to the SEC's complaint filed in federal court in Manhattan, Bill Tsai, a junior investment banker in the bank's New York office, learned of the acquisition when Siris consulted the bank about providing financing and advice on the transaction. The SEC alleges that soon after learning about the deal, Tsai purchased EFII call options, which he sold for a profit of approximately $98,750 shortly after the deal was announced in mid-April 2019.
Tsai allegedly attempted to hide his illegal activity by conducting his trading in a brokerage account that he concealed from his employer, and by circumventing the bank's policies that require employees to pre-clear securities trades.
The SEC's complaint charges Tsai with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks disgorgement of ill-gotten gains plus interest, penalties, and injunctive relief. In a parallel action, the U.S. Attorney's Office for the Southern District of New York announced criminal charges against Tsai.
The SEC's investigation, which is continuing, has been conducted by Melanie A. MacLean, David Oliwenstein, and Simona Suh of the Enforcement Division's Market Abuse Unit, with assistance from John Rymas in the Market Abuse Unit's Analysis and Detection Center. The case has been supervised by Joseph G. Sansone, Chief of the Market Abuse Unit. The SEC's litigation will be led by Ms. MacLean and Ms. Suh. 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.