Wednesday, September 3, 2014

SEC Charges Investor Relations Firm Executive With Insider Trading Ahead of News Announcements By Clients

The SEC charged a director of market intelligence at a Manhattan-based investor relations firm with insider trading ahead of impending news announcements by more than a dozen clients.  The individual being charged garnered nearly $1 million in illicit profits.
An SEC investigation and ongoing forensic analysis of the director's work computers uncovered that he repeatedly accessed clients’ draft press releases stored on his firm’s computer network prior to public announcements.  The SEC alleges that the director, who had no legitimate work-related reason to access the draft press releases, routinely purchased stock or call options in advance of favorable news and sold short or bought put options ahead of unfavorable news. 

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against the same individual.
“Employees of investor relations firms have access to sensitive information about their clients, and exploiting that information for personal gain is not an option,” said Andrew M. Calamari, director of the SEC’s New York Regional Office. 
Read more here.
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