SEC Charges Two People with Insider Trading on Fund's Announcement Regarding Investment

The SEC announced charges against two individuals for insider trading based on a prominent hedge fund manager's announcement that his hedge fund formed a negative view of Herbalife Ltd. and took a $1 billion short position in its securities.

According to the SEC's orders, one of the individuals learned from his roommate, who was then a Pershing analyst, that Pershing planned to publicly announce its negative view of Herbalife. That individual then tipped a friend, who purchased Herbalife one day before the announcement and consequently reaped illicit profits.

See: SEC Press Release; SEC Order - Szymik; SEC Order - Peixoto.