Posts Tagged ‘insider trading’

IFA Online wrote about Alexei Krilov-Harrison released inside information of a major contract between Provexis and an international food company to his clients two days before the formal announcement, when the company’s share price was forecast to rise as a result.

On 28 March 2007, Krilov-Harrison made three calls to clients disclosing the upcoming Provexis deal, advising the share price would ‘jump up substantially’ when made public and encouraging them to buy Provexis shares.

Two days later, Provexis announced the new contract and its share price increased by 19.81% from the closing price on the previous day. The FSA found Krilov-Harrison’s actions had been deliberate and been motivated by his desire to get a bonus.

Margaret Cole, director of enforcement and financial crime at the FSA, says: “Anyone who uses inside information to encourage their clients to buy shares is abusing their privileged position and cheating other honest investors. This is plainly wrong. Market participants must ensure they do not pass inside information to their clients in these circumstances.

“We are committed to tackling market abuse in its various guises and will not hesitate to take action to ensure that the UK markets operate in a fair, efficient and orderly way for all investors.”

New York Times wrote that Estonian prosecutors charged Dmitri Vassiljev, a former analyst at SEB Enskilda, with using inside information to trade shares and options of the Baltic telecommunications companiess Eesti Telekom and TEO.

Mr. Vassiljev used information on TeliaSonera’s offer to buy out minority shareholders in the two companies to which he had access to before it was made public, the Tallinn-based state prosecutor’s office and Financial Supervisory Authority said Thursday in separate statements. Eesti Telekom rose 23 percent and TEO jumped 30 percent after the offer was announced
August 24th.

Comments from CSA Partners:

This case highlights the importance of proper systems and controls that investment banks and advisors should have in place in order safeguard inside information from their customers.

In particular:

• every member of the staff should be exposed to the information only on a need to know basis;
• flow of inside information should be rigorously controlled and list of insiders, with exact date and time when information was received, maintained;
• each employee who has obtained the access to the information, should be alerted about the fact that the information received, is inside information;
• adequate personal account dealing controls (e.g. list of restricted instruments) should prohibit members of the staff from making transactions (directly or via related persons) with securities issued by the customer.

CNBW writes that the US Supreme Court has refused to hear former Qwest CEO Joseph Nacchio’s appeal of his insider trading conviction. The court said Monday it would not entertain Nacchio’s request that he either be acquitted of the charge or granted a new trial.

Prosecutors said Nacchio sold $52 million worth of stock in 2001 while knowing that Denver-based Qwest Communications International would have trouble meeting its sales goals. Nacchio began serving a six-year sentence on April 14. He contended the jury was given improper instructions about what internal information had to be disclosed publicly.

Read the whole story >>

The Securities and Exchange Commission today charged Richardson, Texas resident Reza Saleh with insider trading around the public announcement of Dell Inc.’s tender offer for Perot Systems earlier this week.

The SEC alleges that Saleh made increasingly large purchases of Perot Systems call options contracts based on material, non-public information that he learned in the course of his employment with, or duties for, two Perot-related private companies and Perot Systems. Immediately following the tender offer announcement on Monday, September 21, Saleh sold all of the call option contracts in the accounts and reaped approximately $8.6 million in illicit profits.

Later that same morning, SEC staff with assistance from the Options Regulatory Surveillance Authority identified Saleh as a suspicious trader. Soon after being contacted by SEC staff, Saleh acknowledged to a Perot Systems director that he knew about the impending transaction when he traded.

“The overwhelming evidence in this case allowed the SEC to move quickly against the trader before he could spend the huge profits from his illegal trading,” said Rose Romero, Director of the SEC’s Fort Worth Regional Office. “The Commission is seeking a court order to freeze Saleh’s assets.”

According to the SEC’s complaint, filed in federal court in Dallas, Saleh purchased 9,332 Perot Systems call option contracts through two brokerage accounts between Sept. 4 and Sept. 18, 2009. The call option contracts were set to expire in October 2009 and January 2010. Saleh sold all of the call options following the announcement as Perot Systems’ stock price immediately increased by approximately 65 percent.

Read the full news >>

Tuesday, Aug 18, 2009 DUBAI (Zawya Dow Jones) — Saudi Arabia Tuesday imposed its first jail sentence for insider trading, ordering the former chairman of Bishah Agricultural Development Co. (6080.SA) to jail for three months, according to the country’s Capital Market Authority, or CMA.

Najam Eddin Ahmad Najam Eddin was sentenced to the prison term and fined SR100,000 ($26,670) after he was found “guilty of insider trading in Bishah shares based on him being the chairman of the company’s board,” the market regulator said in a statement on its Web site Najam Eddin also was barred from working for any listed company for five years, the CMA said.

The regulator said it also ordered him to pay back an amount of SAR52,690 gained through “irregular actions.”

Guardian writes about the US Securities and Exchange Commission (SEC) charged Mark Cuban today with insider trading stemming from a 2004 sale of stock in an internet company.

The civil lawsuit alleges that Cuban avoided losses in excess of $750,000 by selling 600,000 shares he learned would be diluted by a new stock offering. The company, Mamma.com, told. Cuban about the offering on the condition that he keep the information confidential.

“Less than four hours later, Mr Cuban betrayed that trust by placing an order to sell all of his shares,” said Scott W Friestad, the SEC’s deputy director of enforcement. “It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market.”

The complaint, filed in the Northern District of Texas, demands that Cuban forfeit the monetary losses he avoided and pay a civil penalty. Cuban has retained Paul E Coggins, a former US attorney for the northern district of Texas, as his defense counsel. Neither Coggins nor his co-counsel, Ralph C Ferrara, could be reached for comment this morning.

Cuban, the owner of the Dallas Mavericks basketball team, owned a 6.3% stake in the company, now known as Copernic Inc. At the time of the sale, he was the company’s largest-known shareholder. Cuban was told about the stock offering through a phone call with Mamma.com’s chief executive on June 28 2004, according to the SEC complaint.

Cuban “became very upset and angry during the conversation” because the private offering would dilute existing shareholders, according the complaint. “Well, now I’m screwed,” Cuban told the executive. “I can’t sell.” But Cuban later called his Dallas broker and ordered him to sell all 600,000 shares he owned. “Sell what you can tonight and just get me out the next day,” he said, according to the complaint.

Cuban liquidated his position on June 28 and June 29, before Mamma.com announced its new, private offering, the complaint says. On June 30, trading in Mamma.com opened at $11.89, down 9.3% from the June 29 closing price of $13.105.

Copernic’s stock plummeted in the months following the private offering, and it has never regained its June 2004 levels. In midday trading today, it was trading at 26 cents a share.

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Comment from CSA Partners: If the company would have used INSIDeR compliance software to manage it’s insider list and this specific inside information case about private offering, this insider trading might not have happened. As INSIDeR sends automatic notifications to every insider added to project-specific list, describing the rights and obligations of the project-based insider, Mr. Cuban could have been more informed about his insider position and might have thought about the consequences and possible charges.

Telegraph writes about Richard Ralph, a former Governor of the Falkland Islands and a past British ambassador to both Peru and Romania, has been fined £117,691.41 by the City regulator after it was discovered he asked a friend to buy shares in Monterrico Metals.

Mr Ralph became chairman of Monterrico in August 2006, shortly before the £93m mining business was taken over by China’s Zijin Consortium. The FSA found that during the takeover talks Mr Ralph asked his friend Filip Boyen to buy about £30,000 of shares in order to conceal his true identity.

At the time, Mr Ralph was closely involved in the takeover talks and was and would have been expected to publicly disclose any dealing in company shares. As well as buying the shares for Mr Ralph, Mr Boyen also bought shares for himself worth £77,162.05. After a takeover deal was announced to the market, Mr Boyen sold both men’s holdings, generating a collective profit of £42,174.36.

Once the FSA began to investigate suspicious trading prior to the takeover, Mr Ralph voluntarily contacted the FSA and admitted to insider dealing. Mr Boyen was fined £81,982.95 and sources said both fines would have been as much as a third higher had it not been for the full co-operation and early settlement by the pair.

Before joining Monterrico, Mr Ralph had a long career as a diplomat, beginning in 1969. He previously hit the headlines when serving as ambassador to Romania after he was embroiled in a controversy surrounding the attempt by steel tycoon Lakshmi Mittal to take over Sidex, a Romanian steel plant.