WIth the varied allegations that have been prevalent from regulators over the past year, we return to the previously more common claim of insider trading in a case out of Texas.
Earlier this week, the Securities and Exchange Commission (SEC) charged Reza Saleh, a Richardson, Texas resident, with insider trading.
These allegations relate to Mr. Saleh's activities prior to Dell Inc.'s tender offer for Perot Systems. The agency alleges that Mr. 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."
Allegedly, immediately after the tender offer he sold all call option contracts and gained about $8.6 million in illicit profits.
The SEC picked-up on this quite rapidly with the help of the Options Regulatory Surveillance Authority, that identified him as a suspicious trader. The SEC has expressed its appreciation to the ORSA for their assistance in the case thus far. When asked, he disclosed to a Perot director that he had knowledge of the impending transaction during the trading.
The SEC's announcement on this case noted that "[t]he 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."
The SEC claims that Saleh violated the Securities Exchange Act of 1934 anti-fraud provisions, including specific provisions that prohibit trading while in possession of material nonpublic information about tender offers. A co-holder of the brokerage accounts is also named as a relief defendant.
The agency's investigation is continuing. It has already sought an emergency asset freeze, a preliminary injunction and a final judgment permanently enjoining Mr. Saleh from future violations federal securities laws. The complaint also seeks an order that would require him to pay financial penalties and disgorge all the gains with prejudgment interest.
Related Web Resources
If you would like to learn more about regulations related to insider trading and related topics, please visit the SEC's website.
The New York City law firm of Gusrae Kaplan Nusbaum PLLC PLLC, provides expert advice and counsel on issues such as insider trading that impact both individuals and brokerages. Please contact our offices for more information or to speak with one of our lawyers.
