The U.S. Securities and Exchange Commission ("SEC") recently reaffirmed its determination to hold those involved in market abuse violations accountable. To illustrate, the following three charges are discussed.
On 10 February 2012, the SEC announced that it was charging yet another person in the Galleon insider trading case involving Raj Rajaratnam. Numerous defendants have been charged in the Galleon insider trading case to date. This time it concerned a managing member of hedge fund investment adviser Whitman Capital LLP and his firm for violating insider trading prohibitions. Allegedly, Whitman traded in the listed securities based on non-public information which he received from a former employee of the Galleon Group hedge fund.
A second insider trading case involves unlawful trading by a former vice-president of Coca Cola. On 8 March 2012, the SEC filed a charge in which it claimed that the former VP allegedly used non-public information about an imminent acquisition by the company to purchase securities of Coco Cola Enterprises on the day before the acquisition. According to the SEC the former VP misappropriated the material non-public information, whereas he had a relationship of trust and confidence with the company, was regularly in possession of sensitive and confidential information and also signed a non-disclosure agreement confirming that he would maintain confidentiality.
Another example of the SEC's focus on market abuse violations is the charge against BankAtlantic Bancorp and its CEO on 18 January 2012. The charges inter alia include accounting fraud and misleading investors about BankAtlantic Bancorp's real estate portfolio at the time that the real estate market floundered. According to the SEC, Bancorp presented misleading information on earning calls in 2007 to conceal losses in its real estate portfolio. Furthermore, BankAtlantic Bancorp allegedly filed incorrect reporting statements.