SEC Charges Investor Relations Provider With Insider Trading
On July 26, 2013, the Securities and Exchange Commission (the “SEC”) charged Stephen B. Gray, an investor relations provider with insider trading in the securities of his firm’s clients. The SEC action alleges that Gray obtained confidential information about his firm’s clients while the firm assisted them with drafting and publishing press releases announcing to quarterly and annual earnings, mergers and acquisitions, and other major events.
According to the SEC’s complaint, Gray then traded on the basis of that material, non-public information for profits and avoided losses of more than $313,000 in a 13-month period. The SEC also alleges that Gray ignored the firm’s agreements with clients to protect confidential information and use it solely for business purposes.
David Woodcock, Director of the SEC’s Fort Worth Regional Office, stated, “Gray boldly abused his position for the sake of illegal insider trading profits…As head of an investor relations firm that helped clients prepare announcements of material events, Gray had unique access to extremely sensitive and confidential information before the rest of the world received it.”
According to the SEC’s complaint, Gray illegally traded in the securities of at least six of the firm’s clients. Employees often asked Gray for advice on press releases based on his status as the firm’s CEO.
According to the SEC’s complaint, Gray opened a trading account and borrowed funds from his life insurance policy to fund his trading activity. According to the SEC, most of Gray’s trades involved securities of the firm clients, and he did not disclose his trades or his intention to trade to the firm or clients.
According to the SEC’s complaint, Gray initially traded in common shares of the firm’s clients and later engaged in risky and lucrative short-term options trades in which profits were facilitated by his knowledge of inside information. In some instances, Gray purchased very short-term call and put options contracts.
The SEC’s complaint charges Gray with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and seeks a final judgment ordering him to disgorge all of his ill-gotten gains with prejudgment interest and pay financial penalties. The complaint also seeks permanent injunctive relief.
Additional information about SEC Actions can be found here:
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
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www.SecuritiesLawyer101.com
