In a case involving an apparent egregious breach of public trust, the Securities and Exchange Commission levelled insider trading charges against a veteran Federal Reserve Bank of Richmond supervisor and examiner for allegedly trading stock and options in two publicly traded companies under his supervision while in possession of material nonpublic information.
The SEC’s complaint contends that in October of 2023, the defendant gained access to a soon to be released bullish earnings announcement by one of the banks in his supervisory group. Using that insider information, he then allegedly purchased over $675,000 of the bank’s stock just hours prior to the public announcement resulting in a gain of almost $80,000 in illegal profits.
In yet another instance of alleged insider trading, the SEC claimed in its enforcement action that the defendant in January of 2024 learned that a second bank under his supervision was planning to release bearish news concerning millions of dollars in unexpected loan losses in its earnings announcement. Armed with that critical non-public knowledge, the defendant is alleged to have purchased thousands of options on the bank’s stock a mere two days before the earnings release, which netted him over a half-million dollars in trading gains.
The SEC’s complaint charged the Federal Reserve Banker with violations of the anti-fraud provisions of the Federal Securities Laws, namely: Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. It also seeks a Court Order requiring him to pay disgorgement (the return of his illegal trading profits realized from the alleged insider trading) with prejudgment interest and civil penalties, as well as to be enjoined from engaging in future violations of the charged antifraud provisions. In what is known as a bifurcated settlement, the defendant consented to the entry of an injunction, in addition to the payment of disgorgement and civil penalties (if any) to be subsequently determined by the Court. Any ultimate settlement reached will need Court approval.
Given the brazen and repeated nature of the alleged insider trading conduct, it comes as no surprise that the U.S. Attorney’s Office filed a criminal parallel case against the banker based upon the same underlying insider trading conduct, to which he pled guilty.
Representing Individuals Facing Insider Trading Investigations
David Chase, Esq. of the Law Firm of David R. Chase is a former SEC prosecutor who previously investigated and prosecuted insider trading cases for the SEC. He now is an insider trading lawyer who represents individuals in SEC insider trading investigations around the nation. If you are in need of an insider trading attorney, call David toll-free at: 800-760-0912 or e-mail him at: david@davidchaselaw.com. You can also visit the Firm’s website for more information about insider trading investigations, as well as the firm’s prior successful results in insider trading investigations, at: www.davidchaselaw.com.
