US authorities have charged nine individuals with securities fraud and other charges in four separate insider trading cases.
In one case, a former US Congressman conducted two schemes to steal material, non-public information obtained through consulting work. In one scheme, the defendant purchased shares of Sprint Corporation ahead of its merger with T-Mobile US, Inc. He breached his duty of confidentiality to T-Mobile, and misappropriated the information he had received. The defendant repeated this method in the second scheme, while doing consulting work for Guidehouse. He determined that the company intended to acquire Navigant Consulting, Inc. Thereafter, he misappropriated that information by purchasing Navigant shares ahead of the public announcement of the acquisition. Overall, the defendant made over $349,000 from his illegal trades. The 63-year-old Congressman has been arrested and charged with securities fraud.
In the second case, two defendants made over $1.4 million in illegal profits by trading in stock based on inside information. One defendant had stolen this information from his unaware then-girlfriend, who was an attorney working on the acquisition of Pandion Therapeutics by Merck & Co. After misappropriating this material non-public information, the defendant purchased shares in Pandion. He also tipped several friends and family members, including the second defendant in this case. The two defendants caused more than twenty people to trade in Pandion stock based on the stolen material non-public information, generating millions in illegal profits. Interestingly, at the time of this trading, the first defendant had been accepted into the FBI training program. The FBI trainee has been charged with securities fraud, tender offer fraud, conspiracy and making false statements. The second defendant has been charged with securities fraud, tender offer fraud, and conspiracy.
In the third case, three defendants engaged in an insider trading scheme in which one defendant, who was the Chief Information Security Officer (CISO) of Lumentum Holdings Inc., misappropriated material, non-public information about Lumentum potentially acquiring Coherent, Inc. and Neophotonics Corporation. He then tipped his co-conspirators, including the two other defendants in this case. Those with the illegally-obtained information collectively profited by nearly $900,000 after the Coherent deal, and by over $4.3 million after the Neophotonics deal. When investigations began, the three defendants attempted to obstruct the investigation by tampering evidence and fabricating documents. The defendants have been charged with securities fraud, wire fraud, conspiracy to commit securities fraud and wire fraud, and conspiracy to obstruct justice.
In the fourth case, the defendant, who was an investment banker at an investment bank in New York, received confidential, internal emails with information about potential mergers and acquisitions transactions that the Investment Bank would finance. The defendant misappropriated that confidential information and tipped a friend, employee at another investment bank in New York. The friend then used that information to engage in trading and agreed to split the profits with the defendant. The defendant earned illegal profits of over $280,000 from this scheme. He also obstructed investigations into the matter by deleting electronic communications regarding this insider trading scheme. The defendant has been charged with securities fraud, obstruction of justice, conspiracy to commit securities fraud and tender offer fraud.
Source: US Department of Justice
