Insider trading stories really do make me shake my head in disbelief and I did that when reading a recent story. In this case, the SEC caught up with a recent college grad for insider trading – within the grad’s first year on the job as a junior investment banker. The action seems pretty cut and dry – within the first year out of college and while working as a junior investment banker, the grad learned of a pending deal, bought call options and sold them for a profit shortly after the deal was announced. Here’s an excerpt from the SEC’s press release:
The grad agreed to settle with the SEC and consented to the entry of a judgment permanently enjoining him from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and ordering him liable to pay disgorgement of his ill-gotten trading profits, with interest, which will be offset by the amount of any forfeiture ordered against the grad in a parallel criminal action. In a separate administrative proceeding instituted on December 23, 2019, the grad consented to be barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any penny stock offering.
On the same day the SEC filed its action, the U.S. Attorney’s Office for the Southern District of New York announced parallel charges against him. The grad pleaded guilty in the criminal action, and in January 2020 he was sentenced to five years of probation and ordered to forfeit approximately $126,000.
According to a story from efinancialcareers, the grad is reportedly the former study body president at NYU’s Stern School of Business and at one time gave advice to first-year students to “hold on to your values.” Not sure what values this person had in mind. It’s hard to imagine that someone wouldn’t understand the concept of insider trading even if the person missed class the day the prof covered it. But, it’s sad to think this could be another case where the person just thought they wouldn’t get caught…
-Lynn Jokela, TheCorporateCounsel.net February 6, 2020
