On December 11, 2017, the SEC charged a stock trader (“Defendant”) with generating over $1 million in illegal insider trading profits. Defendant collaborated with four former colleagues, posing as portfolio managers, to persuade investment bankers to share nonpublic information regarding upcoming secondary offerings. The five traders then disclosed the information to each other and traded for profit before the public announcements.
The SEC had previously charged the four colleagues in June 2015. In a parallel action at that time, the U.S. Attorney’s Office for the District of New Jersey also filed criminal charges against the four colleagues. Similar criminal charges against Defendant have now been filed by U.S. Attorney’s Office for the District of New Jersey following the SEC’s recent case.
WHAT DOES THIS MEAN FOR ME?
Advisers should ensure their personnel are aware that material nonpublic information may be derived from a variety of sources, both inside and outside of the target company. If personnel are unable to determine whether they have acquired material nonpublic information, they should consult their CCO as soon as possible. Please contact Fairview® if you have any questions or concerns about this case.