An Oklahoma City man charged with securities fraud for insider trading has been sentenced by an Ohio federal court to a year in a Texas federal prison and fined $180,000 and settled an SEC case on the same facts, agreeing to forfeit $509,080 in profits from the trade.
His "insider connection"? He was a sales representative under manufacturer’s representative agreements selling products and services to customers. As part of that agreeement, the company expressly prohibited him from disclosing or using for his own benefit, the company's confidential information.
September 13, 2005, he and other sales representatives received from their sales manager two emails with attached financial reports concerning the company's business, showing a decline in revenue and sales that had not yet been publicly disclosed. On the 15th he began purchasing puts, on the 21st the company released an earnings warning, the stock went down 16% that day, and he had a profit of over $500,000.
The SEC complaint is here, the press release of the resolution is here, and the local newspaper story is here.
Hat tip to Bruce Carlton at the Securities Docket
