The Securities and Exchange Commission says that former Barclays Capital (ADR) analyst John Gray, his friends Christian Keller and Kyle Martin, and Aaron Shephard committed California insider trading, making close to $750K in illegal profits. They did this by allegedly trading right before four corporate news announcements were made. To settle the securities fraud case, the four men will pay $1.6 million in total.
According to the SEC, Gray, who was an analyst for Barclays at the time, and Kelly traded on confidential merger data that the latter obtained during his job as a trader for two Silicon Valley-based public companies. They purportedly tried to hide the trades by putting them in a brokerage account held under Martin’s name. Gray also tipped Shephard, so that he too could make trades before the announcements.
The first acts of inside trading purportedly occurred when Gray and Keller traded on confidential merger data that Keller found out about while working as an Applied Materials Inc. financial analyst. The traded prior to that company’s acquisition of Semitool Inc. as well as before the one for Varian Semiconductor. When Keller left Applied Materials, their insider trading scam continued while he worked for Rovi Corporation, where he learned to profitably trade in the company’s securities before negative news about Rovi would be announced.
The SEC accused Keller and Gray of using disposable phones to avoid detection and making cash withdrawals that were structured so that they could share profits. The agency’s complaint said that Gray was mostly responsible for making the trades in Martin’s account, and the two of them also put more trades in other accounts because of confidential data that was given by Keller.
Read the SEC Complaint (PDF)
More Blog Posts:
SEC Claims Investment Adviser Paid for Fraud Settlement With Client Monies, Stockbroker Fraud Blog, February 5, 2015
Insider Trading News: SEC Sues Ex-Capital One Data Analysts, U.S. Attorney Bharara Wants Rehearing in Case Involving Overturned Convictions, and Judge Vacates Four Men’s Guilty Pleas, Stockbroker Fraud Blog, January 23, 2015
Standard & Poor’s Settles Inflated Ratings Case for $1.5 Billion, Institutional Investor Securities Blog, February 3, 2015
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