The SEC charged two individuals with trading on material nonpublic information taken from a company's confidential earnings preview meeting.
In a Complaint filed in the Northern District Court of Illinois, the SEC alleged that a company employee learned confidential information - that earnings were substantially above the company's forecast - by attending a nonpublic, internal company meeting. He then shared the information with a second individual who was a close friend and former colleague. The friend profited by buying call options based on the information and then liquidating the options when the earnings were announced. The SEC's Complaint highlighted the use of an emoji in communications between the alleged miscreants.
The SEC charged the two individuals with violations of Exchange Act Section 10(b) ("Regulation of the Use of Manipulative and Deceptive Devices") and SEA Rule 10b-5 ("Employment of Manipulative and Deceptive Devices"), and sought civil penalties and a permanent injunction to prevent further violations.
The two individuals also face criminal charges from the U.S. Attorney's Office in the Northern District of Illinois.
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