SEC Enforcement: HSBC to Pay $12M Over Cross-Border Breaches

Signorastri managed a New York restaurant where Redmond ate frequently. The two became good friends, and Redmond ended up talking with Signorastri about personal matters as well as his work at New Jersey-based GenTek. His conversations included information about GenTek’s nonpublic negotiations to find suitors for a company sale, which Signorastri then acted on. According to the SEC, Signorastri first purchased GenTek stock after Redmond disclosed material nonpublic information about company negotiations. A year later, he bought more GenTek stock while the company began serious negotiations with American Securities LLC. Two business days after Signorastri’s last stock purchase, GenTek announced it would be acquired by American Securities in a tender offer, and its stock price shot up by nearly 40%. Signorastri sold all of his GenTek shares.

Signorastri wasn’t the only one to benefit from Redmond’s loose conversation; a waiter at Signorastri’s restaurant and the manager at another restaurant where Redmond held a meeting with American Securities representatives also bought stock on the strength of insider information, selling when the acquisition was made public, and combined made $6,162.

While neither admitting nor denying the SEC’s charges, Redmond and Signorastri have agreed to settle them and to pay more than $324,000 to do so. Redmond agreed to pay disgorgement of $149,139—the $6,162 made by the waiter and the other manager, and most of Signorastri’s trading profits—and to pay prejudgment interest of $26,052 and a penalty of $64,821 for a total of $240,012. In addition, he agreed to be barred from acting as an officer or director of a public company for five years. Signorastri agreed to disgorgement of the remaining $21,283 of his profits, as well as prejudgment interest of $3,717 and a penalty of $59,609 for a total of $84,609. The settlement is subject to court approval.

Penny Stock Execs Charged on False Press Releases by SEC

Father and son Robert and Marc Benou, then CEO and company president of New Jersey-based Conolog Corp., were charged by the SEC with issuing phony press releases to push up Conolog’s stock price. They then dumped thousands of their own shares on the market.

According to the agency, Conolog’s public filings say that it manufactures communications equipment primarily for use by electric utilities, fiber optic service providers and the military. In early 2010, the company issued three consecutive press releases filled with bogus information, courtesy of Robert Benou with the assistance of Marc Benou.

In the releases, the Benous inflated a $50,000 total of new equipment orders into $1.9 million, made it appear as if the company had developed new fiber optic technology that was fully vetted and ready for commercial use and sale and touted nonexistent third-party field testing.

Then the Benous hired a PR firm to promote this “news” — after which they took advantage of the increase in the company’s sale price to make profits of more than $81,000 in undisclosed stock sales. They also hid their actions to keep other investors in the dark.

Robert Benou agreed to settle the charges without admitting or denying the allegations by paying $77,490 in disgorgement of illegal profits made from selling Conolog stock as the releases were issued. He also must pay prejudgment interest of $12,400 and a penalty of $177,490, and will be permanently barred from acting as an officer or director of a public company or participating in penny stock offerings.

Marc Benou agreed to settle the charges by paying disgorgement of $4,191 plus prejudgment interest of $671 and a penalty of $51,250. He will be barred for at least two years from acting as an officer or director of a public company or participating in penny stock offerings.

The settlement is subject to court approval.

— Check out Citigroup to Pay $15M FINRA Fine Over Research Leaks on ThinkAdvisor.