Over the summer months, many of us welcome house guests. But for one host, a friend's visit became a temptation for insider trading that was recently concluded by regulators.
Last month, the Securities and Exchange Commission (SEC) settled an action against an individual for alleged insider trading in the securities of Brink's Home Security. The individual involved, Mr. Robert Doyle, did not admit or deny the allegations in the settlement. The facts of the case are interesting because Mr. Doyle is alleged to have obtained the information in an unusual way.
The Commission alleged in its complaint, that the defendant had obtained material nonpublic information regarding the buyout of Brink's by Tyco International, Inc. (Tyco) that was to occur. One of the key members of the team evaluating the acquisition by Tyco was an employee of Tyco's investment bank, named "the Banker" in the Commission's Statement of Facts.
The Banker happened to be a friend of the defendant and stayed with him during the Summer of 2009. He had mentioned to the defendant that he was flying on Tyco's corporate jet, but did not say why. While staying at the defendant's home during August 2009, he worked on the a presentation of the acquisition for Tyco. The presentation had identified the acquirer and the target by name, so the identity of the parties was not in doubt. The Banker did not provide the defendant with inside information.
After the Banker happened to leave a copy of the presentation at the defendant's home, which the defendant found in December 2009, he apparently also found the temptation too great. He began trading on the information after learning from the unsuspecting Banker about travel plans that would have tipped off the defendant that the acquisition was imminent. The defendant's insider trading included the purchase of Brink's securities call options, which purchases were alleged to have "breached a legitimate expectation of confidentiality held by the Banker."
As a direct result of the insider trading, the defendant is alleged to have earned $88,555. In the settlement, he is disgorged of these profits, plus $4,288.66 prejudgment interest and civil penalties amounting to $44,277.50. The defendant has also consented to a final judgment permanently enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5.
New York City's Gusrae Kaplan Nusbaum PLLC, represents brokers before all regulatory agencies. Please contact our law firm for a confidential consultation with one our lawyers regarding representation and our litigation and advisory practice. Our highly-respected lawyers have decades of experience and expertise representing broker-dealers.
