There was an international flavor to some of the recent enforcement actions taken by the SEC and FINRA, which included freezing more than $38 million in assets in an international insider trading case; charging an investment manager and two firms with violations involving a Chinese reverse merger company; charging a Bristol-Myers Squibb executive with insider trading; and the expulsion of a securities firm and its chief executive by FINRA over a number of violations from money laundering to layering and short sales.
SEC Charges Bristol-Myers Squibb Exec With Insider Trading
In a continuing investigation, Robert D. Ramnarine, an executive with Bristol-Myers Squibb in its treasury department, was charged by the SEC with insider trading on confidential information about companies being targeted for potential acquisitions, the most recent of which took place only weeks ago.
The agency is seeking a court order to freeze Ramnarine’s brokerage account assets, and the U.S. Attorney’s Office for the District of New Jersey announced in a parallel criminal action that Ramnarine had been arrested on Thursday.
The SEC charged that Ramnarine made more than $300,000 in illegal profits by misusing nonpublic information he obtained while helping Bristol-Myers Squibb evaluate whether to acquire three other pharmaceutical companies.He conducted his insider trading schemes from August 2010 to July 2012, illegally trading in stock options of Pharmasset Inc., Amylin Pharmaceuticals and ZymoGenetics in advance of announcements that those companies would be acquired, and used multiple personal brokerage accounts for the trades.
Prior to some trading, he even researched via his work computer the likelihood of being caught by regulators, searching for such phrases as “can stock option be traced to purchaser” and “illegal insider trading options trace” and viewing such articles as “Ways to Avoid Insider Trading.” Ironically, he also viewed a press release on the SEC’s website announcing an enforcement action arising from illegal trading in call options in advance of an acquisition announcement.
SEC Freezes $38 Million in Assets in Insider Trading Case
The SEC used an emergency court order to freeze assets valued at more than $38 million in an ongoing investigation into the case of traders using accounts in Hong Kong and Singapore to bring in more than $13 million in illegal profits. The traders were trading in advance of this week’s public announcement that China-based CNOOC agreed to acquire Canada-based Nexen.
The court order also prohibits the traders from destroying any evidence in allegations that the Hong Kong-based firm Well Advantage Limited and other unknown traders stockpiled shares of Nexen stock based on confidential information about the deal in the days leading up to the announcement.
Well Advantage is controlled by the prominent Hong Kong businessman Zhang Zhi Rong, who also controls another company that has a “strategic cooperation agreement” with CNOOC.
In the complaint, filed in federal court in Manhattan, the SEC alleged that Well Advantage and certain unknown traders were in possession of material nonpublic information about the impending acquisition when they purchased Nexen’s stock in the days leading up to the public announcement on July 23.
Well Advantage purchased more than 830,000 shares of Nexen on July 19 and had an unrealized trading profit of more than $7 million based on Nexen’s closing price on the day of the announcement. The other unknown traders used accounts located in Singapore to purchase more than 676,000 Nexen shares in the days preceding the announcement, and immediately sold nearly all the stock once the announcement was made for illicit profits of approximately $6 million.
The SEC took the emergency action to freeze the traders’ assets within days of the public announcement of the deal and less than 24 hours after Well Advantage placed an order to liquidate its entire position in Nexen.
Investment Manager Settles Securities Violations, Will Pay $1.1M