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May 10, 2019 at 10:51 AM
The Securities and Exchange Commission announced that insider trading charges were settled against a Nevada man who obtained confidential information about a pending corporate merger from a lifelong friend and used it to generate more than $250,000 in illicit trading profits.
According to the SEC’s complaint, while Brian Fettner was a guest in the home of a longtime friend who was also the general counsel of Cintas Corp., Fettner surreptiously viewed documents contemplating an acquisition of G&K Services Inc. by Cintas.
Based on that information and without telling his friend, Fettner then purchased G&K Services stock in the brokerage accounts of his ex-wife and a former girlfriend, and persuaded his father and another girlfriend to purchase G&K shares.
The complaint further alleges that after Cintas and G&K announced the merger on Aug. 16, 2016, G&K’s stock price jumped more than 17%, resulting in illicit profits from Fettner’s misconduct of more than $250,000.
Without admitting or denying the allegations in the complaint, Fettner consented to the entry of a final judgment permanently enjoining him from violating the charged provisions of the federal securities laws and imposing a penalty of $252,995.
The SEC also named as relief defendants Fettner’s ex-wife and a former girlfriend, who each profited when Fettner used their brokerage accounts to place illicit trades. The relief defendants consented to the entry of a final judgment agreeing to disgorge those profits with prejudgment interest.
Galvin Charges BD Over Improper Mutual Fund Sales
Secretary of the Commonwealth William Galvin charged Janney Montgomery Scott with violations of state securities laws relating to an agent’s frequent sales of mutual funds with higher front-loaded fees.
In an administrative complaint, Galvin’s Securities Division alleges Janney’s failure to supervise agent Stephen Querzoli’s short-term trading of Class A shares of mutual funds harmed investors, while generating nearly $200,000 in commissions and fees over a six-year period.
The complaint states that Querzoli would frequently sell such mutual funds after mere months, using the proceeds to purchase new mutual funds, and driving up commissions charged to customers by thousands of dollars.
The complaint alleges that Janney did little to stop its agent’s improper sales practices, leaving him unchecked even after opening their own inquiry 3 years into the time period during which the inappropriate sales were taking place.
While Janney advised Querzoli that many of his clients would benefit from the purchase of mutual funds with lower front-loaded fees, Querzoli continued purchasing and selling Class A shares, even while being monitored by his employer, according to the complaint.
The complaint states that Janney and Querzoli split the front-loaded commissions generated by the purchases of Class A shares, with Janney receiving approximately 60% of commissions from the purchases Querzoli made.
“Querzoli continued his practice of purchasing Class A shares for at least four customers during the time he was under review and for several years thereafter until his termination from Janney in November of 2018,” the complaint states.
