Articles Posted in Insider trading

The Securities and Exchange Commission yesterday filed insider trading charges against a former executive of a Florida corporation who repeatedly traded on and tipped confidential information that he obtained through his employer.

The SEC’s complaint, Petmed complaint filed in the U.S. District Court for the Southern District of Florida, alleges that James Alex Irvin, of Boca Raton, Florida, repeatedly traded in the securities of his employer, PetMed Express, Inc., on the basis of confidential information he obtained as PetMed’s Director of Marketing and a member of its Management Committee. According to the SEC’s complaint, Irvin purchased shares of PetMed common stock and call and put options in advance of six PetMed market-moving earnings announcements while in possession of confidential information concerning the Company’s quarterly and year-end financial results. PetMed’s Insider Trading Policy prohibited trading in PetMed options at any time. Additionally, all of Irvin’s trades at issue took place during blackout periods, when Irvin was expressly prohibited from trading in PetMed stock. As a result, Irvin allegedly realized profits and avoided losses of $227,795. The SEC further alleges that Irvin engaged in insider trading based on tipping confidential information concerning PetMed’s positive fiscal 2017 fourth quarter and year-end financial results to his close personal friend, who made modest profits from his trading.

Without admitting or denying the allegations in the SEC’s complaint, Irvin consented to a permanent injunction prohibiting him from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Irvin also agreed to pay $227,795 in disgorgement, $34,494 in prejudgment interest, and a civil money penalty of $252,270. Irvin further agreed to a five-year officer-and-director bar.

Former distinguished Harvard Business School billionaire alum Sri Lankan American Raj Rajaratnam, whose Galleon Group managed more than $7 billion, and who was central to the largest hedge fund insider-trading rings in the history of the U.S., was released from prison two years early. He has been living with his family on a quiet block of Manhattan’s East Side since July 23, according to the Federal Bureau of Prisons. Rajaratnam was sentenced to 11 years behind bars after his 2011 conviction on insider trading. He served his time at the Federal Medical Center Devens, a prison outside Boston.

He falls under the  First Step Act, which allows some federal inmates who are over 60 years old, or who face terminal illnesses, to serve the end of their sentences at home.

The early from prison wasn’t announced by the U.S. Bureau of Prisons. Rajaratnam was due to be released on July 4, 2021, according to the  Bureau of Prison.

Jurors in Atlanta federal court returned a verdict finding a securities broker Raymond J. Pirrello, Jr. liable for insider trading in advance of three merger and acquisition transactions.

The SEC’s evidence at trial revealed that Pirrello received highly confidential nonpublic information about the impending acquisitions of Radiant Systems Inc., Midas Incorporated Inc., and BrightPoint Inc. from Thomas W. Avent, Jr., who performed tax work on each transaction as a partner at an international accounting firm. Pirrello, in turn, tipped his former colleague and long-time friend Lawrence J. Penna, Jr., who traded in the securities of each of the three companies. According to evidence presented during the trial, Penna and his family made at least $107,922 in illicit trading profits, and shared at least $21,500 of these profits with Pirrello.

The jury found Pirrello liable on all counts, finding that he violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934, and Rules 10b-5 and 14e-3 thereunder.

The Securities and Exchange Commission today 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.

AdobeStock_64352337-300x200In an emergency court order, the Securities and Exchange Commission (SEC) announced that they will be freezing all assets in relation to an alleged insider trading case. This case involved the oil-and-gas conglomerate Chevron Corporation and their intentions to acquire Anadarko Petroleum Corporation, which was reported to yield roughly $2.5 million in profits.

Chevron is a multinational energy corporation based in the United States. They announced that they intended to invest in outstanding shares of Anadarko, which is also based in the U.S. and sells petroleum. While the buying of shares warrants no action on its own, Chevron intended to acquire them for $65 per share in cash and stock. This type of investment would represent a 38 percent premium over Anadarko’s closing price pre-announcement.

The SEC complaint filed in the U.S. District Court for the Southern District of New York identified a series of transitions that could be considered suspicious. Days before the announcement, unknown traders allegedly used foreign brokerage accounts in the United Kingdom and Cyprus to purchase out-of-the-money call options through U.S. based brokerage firms and on U.S. based exchanges. After the announcement, Anadarko shares rose in price significantly. Brokerage account customers benefited greatly by either utilizing their right to gain large positions of Anadarko stock at a discount or selling many of the option contracts for profit.

insider-trading-300x168Charlie Jinan Chen, a Boston restaurant owner, is accused of insider trading of Vistaprint stock after illegally receiving confidential information from a former Vistaprint employee. His wife, Shui Foon Mak, is also being charged for her part in reaping the illegal profits, which are believed to be in excess of $850,000. But, how did this all work?

Insider Information Leaked from 2012-2014

Vistaprint is an eCommerce platform that specializes in selling customizable business materials and other products. From 2012-2014, Chen received insider information from an employee of Vistaprint, identified only as “Jenny” in court documents. Jenny was an accounting manager that reportedly handled Vistaprint’s quarterly financial statements, which included confidential information that would remain unavailable to the public prior to a set date for release. It was this information that Chen allegedly used to generate fraudulent profits.

insider tradingAccording to the Securities and Exchange Commission’s 2018 Annual Report, 262 tips were received from whistleblowers regarding insider trading and resulted in a total of 56 charges throughout the year. As one of the SEC’s most successful years in combating insider trading, it is evident that the combination of whistleblower tips and modern technology are the key to securing the integrity of the securities market.

What is Insider Trading?

According to the SEC’s, “Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, nonpublic information about the security. Insider trading violations may also include “tipping” such information, securities trading by the person “tipped,” and securities trading by those who misappropriate such information.”

United States House of Representatives member Christopher Collins, a Republican from New York, was arrested and charged with illegally sharing inside tips with his son about an Australian biotechnology company Innate Immunotherapeutics, Ltd .  Rep. Collins was a member of Innate’s board of directors and one of the company’s largest shareholders, holding approximately 16.8% of its stock, the indictment said. representative Collins has served in the House of Representatives since 2012. It is alleged that he conveyed material non-public information about the failed trial of a multiple sclerosis drug to his 25-year-old son, Cameron Collins, so that he could trade on the tip. Prosecutors assert that his son sold nearly 1.4 million Innate shares and passed the information onto other individuals, including his fiancée and her father, Stephen Zarsky. Mr. Zarsky then sold all of his Innate shares and shared the tip with others. Innate announced the failed drug trial after U.S. markets had closed on June 26, 2017. The next day, the company stock dropped 90%. The indictment says that the tip allowed the defendants to avoid $768,000 in losses.

Rep Collins, Cameron Collins and Mr. Zarsky were charged with 10 criminal counts, including securities fraud, wire fraud and making false statements during interviews with the Federal Bureau of Investigation. Before this indictment, Collins was already under investigation for his role in promoting Innate Immunotherapeutics.  In October, the Office of Congressional Ethics found “substantial reason to believe” Collins violated federal law and House rules by meeting with federal officials in his congressional capacity to seemingly benefit the firm and also that he shared private information about the firm to solicit investors.




In case you haven’t read some of the background of the worldwide hacker group doing insider trading, the actual facts surrounding the worldwide group that gained access since 2010 to news wire services including Business Wire and MarketWire, gaining access to tens of thousands of early releases on major business deals, reads like a Hollywood script fit for George Clooney and his friends in Oceans Eleven.

The Securities and Exchange Commission, investigating the 5 year hack, says that the coordinated ring of traders profited in excess of $100 million and possibly a lot more. According to reports, several Ukraine based hackers  penetrated the computers of the news services using stolen name and password information on to unscrupulous traders concerning major market affecting business news ahead of the actual news releases.

Those traders then took the information and bought stock in the companies involved.

Iftikar “Ifty”Ahmed, 1999 Harvard Business  School Grad and  Connecticut venture capital executive accused of insider trading and of cheating his clients out of tens of millions of dollars has fled the country, the U.S. Securities and Exchange Commission says.

Ahmed, a former general partner at Oak Investment Partners, left the United States  before May 18directly violating a judge’s order in an insider trading case . He had been restricted to traveling in only three US States.

The SEC says that his “recent flight from the United States” was a reason to expand an asset freeze to include various properties owned by Ahmed. A federal judge in Connecticut granted the request on Thursday.