The Securities and Exchange Commission today charged a former executive at a Coca-Cola bottling company with insider trading based on confidential information he learned on the job about potential upcoming business with The Coca-Cola Company.
The SEC alleges that Steven Harrold, who was a Vice President at Coca-Cola Enterprises Inc., purchased company stock in his wife’s brokerage account after learning that his company had agreed to acquire The Coca-Cola Company’s bottling operations in Norway and Sweden. The stock price jumped 30 percent when the deal was announced publicly the following day, enabling Harrold to make an illicit $86,850 profit.
“Harrold deliberately flouted the federal securities laws and specific company restrictions in his purchases and trades of Coca-Cola Enterprises stock,” said Rosalind R. Tyson, Director of the SEC’s Los Angeles Regional Office. “His employer entrusted him with critical nonpublic information, and Harrold shattered that trust to bottle up extra cash.”
Coca-Cola Enterprises is one of the world’s largest marketers, producers and distributors of Coca-Cola products, and its stock trades on the New York Stock Exchange under the stock symbol CCE. The Coca-Cola Company (ticker symbol: KO) develops and sells its products and syrup concentrate to Coca-Cola Enterprises and other bottlers.
According to the SEC’s complaint filed in the U.S. District Court for the Central District of California, Harrold was regularly in possession of sensitive, confidential information as an executive at CCE. On numerous occasions, Harrold signed non-disclosure agreements requiring him to keep confidential any information he learned about acquisitions being considered. Harrold also periodically received blackout notices prohibiting him from trading in company stock for a defined period in which he was likely to be in possession of confidential information.
The SEC alleges that Harrold, who lives in Los Angeles and London, was informed in early January 2010 that CCE was considering the acquisition of The Coca-Cola Company’s Norwegian and Swedish bottling operations. He signed a non-disclosure agreement requiring him to maintain the confidentiality of any nonpublic information he learned about the potential transaction. Harrold also received an e-mail from CCE’s legal counsel informing him that he was subject to a blackout period and was prohibited from trading in CCE stock “until further notice.”
Nevertheless, the SEC alleges that Harrold purchased 15,000 CCE shares in his wife’s brokerage account on Feb. 24, 2010, the day before the announcement of the transaction with The Coca-Cola Company. The insider trading was based on certain confidential information that Harrold learned in the days leading up to the announcement, including that the transaction was internally valued at more than $800 million and was viewed as creating significant positive growth opportunities for CCE.
The SEC’s complaint charges Harrold with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. The complaint seeks a final judgment ordering Harrold to pay a financial penalty and disgorge his ill-gotten gains plus prejudgment interest, preventing him from serving as an officer or director of a public company, and permanently enjoining him from future violations of those provisions of the federal securities laws.
The SEC acknowledges the assistance of FINRA in this matter.