The SEC charged a former IT administrator for a cloud computing company and others with insider trading based on confidential information regarding the company's earnings results and financial performance. According to the Complaint, the IT administrator and traders used the confidential information to trade company securities. The SEC alleged that as a result of the insider trading, the IT administrator and traders made more than $7 million in profit.
In order to avoid detection, the SEC claimed, the IT administrator and traders (i) used a code word for company securities, (ii) communicated via phone and text messaging, (iii) in the case of the administrator, hid his identity to impersonate an account holder when taking a phone call with the company, and (iv) made cash withdrawals under the $10,000 cash transaction reporting limits when kicking back trading profits.
The SEC is seeking (i) a permanent injunction against the IT administrator and traders from further violating SEC rules, (ii) disgorgement of all illicit trading profits with interest and (iii) the payment of civil penalties.