SEC Can Pursue Ex-Euro Pacific Capital Brokers For Insider Trading
In Manhattan, U.S. District Judge Jed Rakoff said that the SEC could pursue insider trading charges against two ex- Euro Pacific Capital Inc. stockbrokers despite a recent ruling issued by the 2nd U.S. Circuit Court of Appeals in another case.
Judge Rakoff turned down Benjamin Durant and Daryl Payton request to dismiss the SEC case accusing them of illegal trading prior to an IBP Corp. deal. The brokers had contended that the securities case should be dismissed because of the Second Circuit’s ruling that threw out the convictions of two hedge fund managers. The appeals court held that prosecutors have to prove a trader was aware that the source who provided a tip got a benefit beyond friendship for the exchange.
Payton, Durant, and others were criminally charged and pleaded guilty to insider trading. They had traded on SPSS stock based on a tip that IBM was going to acquire SPSS Inc. However, after the 2nd circuit ruling in the hedge fund case, a federal judge threw out the guilty pleas and prosecutors dismissed the criminal charges.
Still, the SEC continued with its criminal case against Payton and Durant. Now Rakoff is delaying the scheduled civil trial while the U.S. Supreme Court decides whether to deal with the appellate court’s ruling.
Former Morgan Stanley Broker Accused of Swallowing Tips Pleads Guilty
Vladimir Eydelman, an ex-Morgan Stanley (MS) broker, has pleaded guilty to tender-offer fraud, securities fraud, and conspiracy to commit both in an insider trading case. In federal court in New Jersey, the 43-year-old admitted to receiving insider corporate tips on pieces of paper and napkins, which he then chewed up and swallowed at Grand Central Station in New York.
The tips involved information filched from computers at a New York law firm. The insider trading scam, which lasted five years, resulted in $5.6 million in profits. Frank Tamayo, who provided Eydelman with the information, pleaded guilty to the charges against him last year. Eydelman used the information given to him to buy securities for himself, relatives, friends, Tamayo, and his brokerage clients before news of the deals went public.
SEC to Get $30M in Insider Trading Case Involved Hacked News Releases
Capital Partners Limited and its CEO Andriy Supranonok will pay $30 million to resolve charges accusing them of making money from trades that were based on non-public information from news releases that were hacked. The regulator filed securities charges against over thirty defendants in the alleged insider trading scam.
The fraud purportedly involved the breaking into news wire services to steal the information, which was then sent to international traders before the data became public. The traders purportedly made over $100 million from the scam.
Father and Son Faces SEC Charges Over Insider Trading
The SEC is charging John McEnery III, John McEnery IV, and Michael Rawitser with insider trading prior to a merger involving healthcare companies. According to the regulator, John McEnery III breached a duty of trust and confidence that he owed a friend when he traded and tipped others, including his son and Rawitser, to trade in Clarient Inc. stock prior to the company’s acquisition by GE Healthcare.
After news of the acquisition went public, Clarient’s stock price went up 33% and the three men made over $50,000. To settle the SEC charges, they have agreed to collectively pay about $170,000. They are not, however, denying or admitting to the SEC’s findings.
SEC can pursue insider trading case against brokers: judge, Yahoo/Reuters, September 11, 2015
Former Morgan Stanley broker pleads guilty to insider trading, Crains New York, September 16, 2015
SEC Obtains $30 Million From Traders Who Profited on Hacked News Releases, SEC, September 14, 2015
Securities and Exchange Commission v. John McEnery III et al., Civil Action No., SEC, September 9, 2015