SEC Settles Charges against Husband and Relatives for Insider Trading
Commentary by Steven Lofchie
The SEC settled charges brought against an Arizona resident, Damon Hovannisian, and his relatives, for insider trading. The SEC alleged that Mr. Hovannisian traded on material nonpublic information that he learned of through his wife. In addition, the SEC alleged that Mr. Hovannisian tipped his brother, father, and a friend (collectively, the "Defendants") to the insider information.
According to a complaint filed in the United States District Court for the Eastern District of California, the Defendants generated more than $155,000 in profits as a result of the illicit trades. The SEC alleged that Mr. Hovannisian misappropriated information from his wife, a high-level employee at a semiconductor company, regarding an impending acquisition that would potentially have a positive impact on the company's stock. This violation, the SEC said, not only "breached the duty of trust and confidence he owed to [his] spouse," but also violated Section 10(b) of the Exchange Act.
All four defendants consented to a final judgment ordering them to pay penalties, disgorgement, and interest collectively totaling nearly $500,000.
Commentary
While the results are far too small to have any statistical validity, the Cabinet news reported a number of other instances of husbands violating their wives' confidences by trading on inside information. (See, e.g., the "Cannabis Consultant"; and the "Research Scientist"). To date, no wives have been prosecuted for doing the same. On that note, here is our musical selection dedicated to unworthy husbands.
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