CFO of Private Equity Firm Charged with Insider Trading
The SEC filed an insider trading lawsuit against the CFO of a private equity firm for insider trading on information learned during the course of his employment. The SEC complaint alleges that the defendant tipped friends and relatives to (a) purchase the securities of a publicly-traded issuer after learning that his employer intended to acquire the company, (b) sell the same security short before a negative earnings announcement, and (c) purchase again before an acquisition announcement. The SEC’s complaint indicates that the Defendant received ample notice of trading blackouts and understood his insider obligations and prohibitions.
OUR TAKE: Significant for firms is that the private equity firm itself escaped regulatory criticism because it had notified its employees of the applicable blackout periods and trading prohibitions.