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Financial worker and two friends charged with SEC violations

On behalf of Brewer, Pritchard & Buckley, P.C. posted in sec compliance and enforcement on Wednesday, July 11, 2018.

In the fast-paced world of high finance, people in Texas and across the U.S. who are seeking to make as much money as they can as quickly as they can might engage in behaviors that will draw the attention of the Securities and Exchange Commission. To be fair, the rules that govern federal securities law can be somewhat confusing and people might not realize that the hot tip they received or the steps they have taken to make a smart investment and garner a positive outcome was illegal. It is not until they are arrested that they realize the scope of SEC enforcement and must consider how to lodge a defense against allegations that the law was violated.

Arrests were made in New York alleging three people used insider trading to make money on one company purchasing another. One man, 32, worked as an analyst at Standard & Poor’s. He is accused of giving a tip to two other men that there was a transaction about to take place in which two paint manufacturers were doing a deal. He is said to have seen confidential memos while on the job.

One friend, 55, and another, 31, made approximately $300,000 by purchasing shares of the company that was being purchased by the other company. The 55-year-old runs a salon; the 31-year-old is the manager of a jewelry store. The S&P employee is said to have been untruthful when he said he did not know the other two men. One paint company had agreed to buy the other for $113 per share. That was a 35 percent increase from what the price of the shares were prior to the announcement of the merger. The S&P employee was suspended from his job. The men face allegations of conspiracy and securities fraud. There can be a jail sentence of as much as 20 years in prison for securities fraud.

The SEC takes it very seriously when people are believed to have manipulated the market, used information they should not have used to profit, or committed other violations of the law. People who are accused of these crimes can face jail time and the prospect of losing their jobs. It might be that there is a logical explanation for what happened. The person could have gotten caught in a situation that he or she did not understand. To combat the charges, it is imperative to have a law firm that is experienced in dealing with SEC compliance and enforcement.

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