SEC Charges Investment Adviser Associate with Insider Trading

The SEC charged a senior associate at a registered investment advisory firm for trading on material nonpublic information.

In the Complaint, filed in the U.S. District Court for the Southern District of New York, the SEC alleged that the senior associate accessed a close relative's brokerage account and traded ahead of material public announcements by three biopharmaceutical companies. With respect to each company, the SEC alleged that the associate received confidential clinical trial data and financing information through his employer's confidentiality agreements with the companies. The SEC stated that the associate used the relative's account to purchase shares before the public announcements were made. The SEC further alleged that when his firm circulated FINRA trader identification lists identifying the relative as having traded in two of the securities, the senior associate (i) falsely claimed not to recognize the relative's name (on two separate occasions), and (ii) resigned three days after submitting his second false response.

The SEC alleged that the fraud generated approximately $65,000 in illicit profits.

The SEC charged the associate with violations of SEA Section 10(b) ("Use of Manipulative and Deceptive Devices") and Rule 10b-5 thereunder ("Fraud in the Purchase or Sale of Securities").

The SEC seeks a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, civil monetary penalties, and a bar prohibiting the senior associate from acting as - or being associated with - an investment adviser, broker, or dealer.