SEC Charges Two Former Investment Bank Employees with Insider Trading in Advance of Research Reports Containing Ratings Changes

The SEC announced insider trading charges against two former investment bank employees involved in an alleged scheme to profit by buying or short-selling a stock prior to the publication of research analyst reports containing a ratings change.

The SEC's Enforcement Division alleges that a research analyst at an investment firm tipped a trader at the firm in advance of several market-moving ratings upgrades and downgrades that the analyst made in certain securities, enabling the trader to generate more than $117,000 in profits.

See: SEC Order; SEC Press Release.