The Securities and Exchange Commission (SEC) announced earlier this week that it has secured a settlement with the former Perot family companies employee charged with insider trading. The Securities Lawyer Blog featured this matter on an earlier post.
The settlement includes a return of illicit profits and the overall amount to be returned exceeds $8.6 million. The settlement was filed in federal court in Dallas, Texas. Part of the settlement includes a request by the SEC that a distribution plan be developed for the illegal profits to be returned. This plan would be handled by a third party. The agency also seeks to impose a financial penalty against the former Perot family company employee, Mr. Reza Saleh.
The insider trading case developed after Dell Inc. announced its intention to acquire Perot Systems. The agency alleged that Mr. Saleh had 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.
WIthin two days, the SEC was in court and pursuing the insider trading deal as it sought and secured an order freezing the profits that resulted from the it. The SEC alleged that Mr. Saleh had "illegally traded in Perot Systems call options after learning about the merger before it was announced."
The SEC was assisted in the matter by several other entities including the Chicago Board Options Exchange, Options Regulatory Surveillance Authority, the Nasdaq OMX and the Financial Industry Regulatory Authority (FINRA).
Mr. Saleh has not admitted or denied the allegations against him. The settlement includes an agreement that he will be permanently enjoined from violations of the anti-fraud provisions of the Securities Exchange Act of 1934 as well as an agreement to an SEC administrative order barring him from future association with any investment adviser.
Related Web Resources
Click here to read more about the Options Regulatory Surveillance Authority and the authorities involved in surveillance and investigation of insider trading matters.
