A former registered research analyst and representative settled FINRA charges for engaging in insider trading.
In a Letter of Acceptance, Waiver and Consent, FINRA found that the analyst bought the securities of two companies using family members' accounts on the basis of material nonpublic information. The information involved a pending research rating upgrade for the companies. As a result, FINRA found that the analyst violated Section 10(b) of the Exchange Act, SEA Rule 10b-5 ("Employment of Manipulative and Deceptive Devices"), and FINRA Rules 2020 ("Use of Manipulative, Deceptive or Other Fraudulent Devices") and 2010 ("Standards of Commercial Honor and Principles of Trade").
FINRA also found the analyst in violation of FINRA Rule 2241 ("Research Analysts and Research Reports") asserting that the analyst (i) traded in the securities of issuers that he covered, in violation of his firm's written forbiddance of such activity, (ii) traded inconsistently with the recommendations he made, (iii) published research without disclosing the financial interest that a member of his household had in the securities of the issuer the research concerned, and (iv) failed to disclose the nature of such interest. Additionally, FINRA determined that the analyst lied to FINRA staff during their investigation of his trading history by falsely claiming that he hadn't placed certain trades, in violation of FINRA Rule 8210 ("Provision of Information and Testimony and Inspection and Copying of Books").
To settle the charges, the analyst agreed to be barred from association with any FINRA member in any capacity.
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