SEC charges three people in North Carolina with insider trading
On 20 September 2012, the Securities and Exchange Commission (''SEC'') charged a former senior vice president and board member at insurance company Mercer with illegally providing inside information about an impending merger.
The former board member shared confidential details about takeover negotiations between Mercer and United Fire with friend A, who subsequently tipped the information to friend B. The SEC's complaint alleges that the three men violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. They intentionally acted to defraud, and engaged in fraudulent acts. The two friends made more than USD 83,000 in illicit profits by illegally trading on the confidential information.
By cooperating with the SEC and voluntarily providing all necessary evidence at the outset of the investigation, and thus saving the SEC time and costs, friend B saw the amount of his penalty reduced to USD 11,380.39. None of the three individuals admit or deny the allegations, and each settlement is subject to court approval.
SEC freezes assets of insider trader in Burger King stock
The SEC obtained leave to freeze assets on 20 September 2012 to prevent a stockbroker from transferring his assets outside U.S. jurisdiction. From 17 May 2010 to 1 September 2010, the stockbroker allegedly used non-public information from a customer and engaged in insider trading ahead of Burger King's announcement that it was being acquired by a New York private equity firm.
The stockbroker misused the confidential information to illegally trade in Burger King stock for USD 175,000 in illicit profits, and he tipped, according to the SEC's complaint, at least four other people who also traded on the non-public information. The customer made additional purchases in Burger King call options. The customer's total insider trading profits amounted to more than USD 1.68 million.
The SEC's complaint against the stockbroker seeks a permanent injunction for violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3. According to the SEC the stockbroker knew that the confidential information regarding the impending Burger King acquisitions was material and non-public. The SEC's investigation continues.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
