Among recent actions by the SEC and FINRA were charges against a hedge fund analyst and two friends for insider trading, and sanctions and fines for one firm for reporting and disclosure failures and another for options reporting failures.
Hedge Fund Analyst, Two Others Charged by SEC for Insider Trading
The SEC charged Matthew Teeple, a hedge fund analyst from San Clemente, Calif., with insider trading, along with two of his friends—a company executive who provided tips and a Denver-based investment professional.
According to the regulator, Teeple got the essential information on July 16, 2008, from David Riley, the chief information officer at Foundry Networks, which was to be acquired by Brocade Communication Systems on July 21 for approximately $3 billion. Armed with nonpublic data, Teeple got the hedge fund advisory firm where he worked to buy up large quantities of Foundry’s stock before news of the acquisition went public. The stock gained 32% on the news, and the hedge funds the firm managed saw millions added to their bottom lines.
Teeple is accused of telling, among others, John Johnson, a Denver-based investor with whom he had become friends thanks to an earlier working relationship. Johnson also made illegal trades on Teeple’s tip, as did the others Teeple told.
The acquisition took till Dec. 18 to be completed, and Riley slipped Teeple additional inside information on at least two other major announcements before Foundry actually made them—on an April earnings forecast and on a delayed shareholder vote on the acquisition—and Teeple’s firm used these as well to make money or avoid losing money, the SEC said.
The SEC, whose investigation is continuing, seeks disgorgement of gains, prejudgment interest and additional financial penalties. The U.S. Attorney’s Office for the Southern District of New York has also announced criminal charges against Teeple, Riley and Johnson.
HSBC Securities Fined, Sanctioned by FINRA