SEC Obtains Preliminary Injunction against Two Individuals for Insider Trading (with Lofchie Comment)

The SEC announced that the federal district court in Philadelphia entered a preliminary injunction against two former employees of Capital One Financial Corporation ("Capital One") as part of a continuing litigation involving the operation of a fraudulent and "highly profitable" insider trading scheme.

According to the SEC complaint filed in January, the defendants worked as data analysts for Capital One and had access to databases containing confidential information about the credit card activity of millions of customers. The defendants were able to aggregate the credit card purchases made by Capital One's customers at over 170 publicly traded consumer retail companies, and traded options on the stocks of these companies ahead of corporate sales and earning announcements.

Lofchie Comment: This case is interesting because it is predicated on the theft of economic data rather than a large amount of material news about a particular issuer.

See: SEC Litigation Release. See also: Insider Trading Specialty Page (available to Cabinet subscribers only).