SEC Charges Hedge Fund Manager With Insider Trading And Reporting Violations

The SEC charged a hedge fund manager and his firm with insider trading based on material nonpublic information that the manager had learned in confidence from a corporate executive.

The SEC complaint alleges that the hedge fund manager generated substantial illicit profits by purchasing securities in a pipeline company in advance of the sale of its natural gas processing facility. The SEC claims that the hedge fund manager used his status as one of the company's largest shareholders to gain access to a corporate executive and obtain confidential details about the upcoming asset sale. The manager and his firm are accused of accumulating the company's securities despite explicitly agreeing not to use the material nonpublic information for trading purposes. When the company publicly announced the asset sale, its stock price jumped more than 31%.