The SEC charged a former senior compliance analyst at an investment bank with trading on material, nonpublic information using his parent's brokerage accounts. The SEC also charged the analyst's parents as relief defendants.
In a Complaint filed in the U.S. District Court for the Southern District of New York, the SEC stated that the analyst, by virtue of his role at the investment bank, had access to material, nonpublic information concerning potential mergers, tender offers and financings. The SEC alleged that the analyst misappropriated this information by trading on it ahead of corporate events using four U.S.-based brokerage accounts held in his parents' names. The SEC claimed that, in an effort to conceal his activity, the analyst alternated brokerage accounts, refrained from placing large trades and made only modest profits. The SEC found that, in total, the analyst generated a profit of $471,700.
The SEC charged the analyst with violations of Section 17(a) ("Use of Interstate Commerce for Purpose of Fraud or Deceit") of the Securities Act, Sections 10(b) and 14(e) of the Exchange Act, and SEA Rules 10b-5 ("Employment of Manipulative and Deceptive Devices") and 14e-3 ("Transactions in Securities on the Basis of Material, Nonpublic Information in the Context of Tender Offers").
The SEC is seeking against the analyst (i) a permanent injunction, (ii) an asset freeze, (iii) disgorgement plus prejudgment interest and (iv) civil monetary penalties. The SEC is seeking against the analyst's parents, the disgorgement of ill-gotten gains.
Primary Sources
- SEC Press Release: SEC Charges Investment Bank Compliance Analyst with Insider Trading in Parents' Accounts and Obtains Asset Freeze
- SEC Complaint: Jose Luis Casero Sanchez, and Jose Luis Casero Abellan and Maria Isabel Sanchez Gonzalez
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